Download Opinion COM (2011) 594

The Special Standing Committee for European Affairs, in its sitting of Thursday December 8 at
18.15 adopted an
OPINION
on the Proposal for a Council Directive on a common system of financial transaction tax and
amending directive 2008/7/EC [COM (2011) 594 final].
The members of the aforementioned Committee, having considered:
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the Proposal for a Council Regulation on the methods and procedure for making
available the own resource based on the financial transaction tax [COM (2011) 738
final],
the Report by the Economic and Monetary Affairs Committee of the European
Parliament (Rapporteur: Ms Anni Podimata, member of the European Parliament with
the PASOK party) on innovative financing at a global and European level [2010/2105
(INI)],
the background document by the Hellenic Parliament Office to the European Parliament
dated 17.1.11,
the oral briefing by the Rapporteur of the aforementioned report Ms Anni Podimata,
Member of the European Parliament with the PASOK party,
adopted by majority the following Opinion:
Subsidiarity Principle
The Proposal for a Council Directive concerns the introduction of an indirect financial
transaction tax. The goal is twofold: on one hand, financial markets’ stability and
transparency and, therefore, systemic risk reduction, through limiting short-term speculative
transactions, and, on the other, the socially just increase of revenue (own resources) of the
EU Budget, by transferring tax burden from overtaxed labour to undertaxed capital. Through
the introduction of a single financial transaction tax at the level of the EU, the Proposal for a
Directive guarantees the harmonization of indirect taxation rules for these transactions. It
thus contributes to averting competition distortions caused by potential member-states’
unilateral measures, and by extension, to the Single Market’s proper functioning.
The financial transaction tax’s main characteristics are the following:
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Member-states determine financial transaction tax rates as tax base percentages.
These rates may not be less than 0,1% for the total of financial transactions, with
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the exception of derivative contracts and 0,01% for financial derivatives‘
transactions.
The implementation field is broad, for the tax basis to include all transaction types
and avoid demand shifting from the financial sector’s fully regulated sections to the
least regulated ones.
Taxation is levied according to the establishment principle in order discourage the
displacement of the tax base to areas of lower or even zero taxation.
However, in the context of financial globalization, the implementation spectrum of a
given tax regulation is interwoven with its optimal implementation scale. Moreover,
in the financial sector, innovation precedes regulation. Therefore, the measure’s
optimal implementation scale – as a form of tax harmonization- is the G20
economies. As a second best, it could be the European Union as a whole. In this
respect, there are no subsidiarity issues: implementation of such a measure at a
national level would simply raise competitiveness problems, displacing transactions
in member-states with lower or zero taxation and would contribute to the single
market’s fragmentation. Furthermore, there are no issues of member-states’ fiscal
sovereignty, given that the measure’s individual implementation would not restore
it. The optimal level of intervention is always the level at which the problem to be
addressed arises, or else, the effectiveness of the intervention shall not be
guaranteed.
Proportionality Principle
The Proposal for Directive launches the minimum necessary political regulation of
financial markets to tackle their short-term volatility. In this respect, it introduces a
minor political intervention aiming both at the markets’ more effective functioning
and, by limiting short-term speculative transactions, at dealing with the financial
sector’s lack of proper regulation and undertaxation. Transactions both in
government paper and currencies in primary markets are exempted from its
implementation scope. The same holds for transactions between the European
Central Bank and the member-states’ central banks. Furthermore, low tax rates are
introduced, with a marginal effect on capital costs for purposes other than financial
investment.
In a nutshell, the proposed tax regulation limits itself to the minimum necessary
level to achieve the aforementioned dual objective (short-term stability, new own
source for the EU). In that respect, it does not go beyond what is necessary to this
end.
Hellenic Parliament Commentary
The Hellenic Parliament by majority supports the launching of the proposed tax,
which is a variation of the so-called “Tobin tax” being discussed for a long time
within the EU. It deems it to be a political priority for European economic
governance and the political management of globalization. At the same time,
however, it expresses its concern on the actual possibility of having it implemented
both at the global and the European level – at the latter level, considering the
unanimity required on taxation issues and taking note of Great Britain’s expressed
discord on the matter.