A new tax has been proposed which would tax the activities – profits and remunerations – of banks and other financial institutions in the EU. The European Commission has come out in support of the new financial activities tax, considering it a good way to raise money from the EU’s financial sector.
Officials in Brussels chose the activities tax over the alternative idea of a financial transactions tax. They said Thursday that the transactions tax had a high risk of simply sending business to other regions.
“The Commission will support further exploration and development of the FTT and its variants at G20 level and will work to promote an agreement with the most relevant international partners,” European Commission officials said. “At this stage, the Commission considers that there is greater potential for a financial activities tax at EU-level,” they added.
Those in favor of the tax said that despite the financial sector receiving large sums of public money during the financial crisis, they are one of the lightest taxed industries. While there is agreement in Brussels, preliminary discussions with member states have revealed disparity over any form of financial taxation. The taxation laws would have to pass unanimously to be enacted at the EU level.
Tax officials are expected to present their proposals later this month to EU officials. They will also collaborate on in-depth assessments of impact, with a loose, vague timeline of producing policy initiatives “in 2011.” Financial institutions will be bracing themselves, and no doubt lobbying for the least possible increase in taxes in the mean time.