Nov. 1 (Bloomberg) -- Two U.S. lawmakers will introduce measures to impose a transaction tax on financial firms that resembles a proposal released by the European Union.
Senator Tom Harkin, an Iowa Democrat, and Representative Peter DeFazio, an Oregon Democrat, will introduce the bills tomorrow in their respective chambers. The bills will give the United States an increased role in the international debate over a transaction tax, which is likely to be discussed at the Group of 20 summit this week in Cannes, France.
“It’s a significant way to raise some needed revenue,” Harkin said in an interview today in Washington. “Quite frankly, I bet nobody would even feel it.”
The European Union in September proposed a financial transaction tax that would take effect in 2014 and raise about $57 billion euros ($78 billion) a year. Germany and France have led a push for global implementation.
Harkin and DeFazio are proposing a lower rate in the United States. While the EU proposal would apply a tax of 0.1 percent on trades of stocks and bonds, the U.S. tax would be “about three basis points” or 0.03 percent, Harkin said.
Harkin and DeFazio introduced similar proposals in recent years that fell short; the lawmakers expressed hope that the European proposals may increase support in the U.S. Congress.
“We’re simplifying it, looking at a lower rate and actually substantially mirroring the proposal in Europe,” DeFazio said in an interview.
Bank trade groups like the Financial Services Forum and Securities Industry and Financial Markets association have opposed transaction tax proposals in the past. In September, they joined with five other business trade groups to send a letter to Treasury Secretary Timothy F. Geithner opposing the idea, which was gathering support in Europe.
“The G20 members have committed to work together to support policies that will lead to strong, sustainable and balanced growth,” the trade groups, which included the U.S. Chamber of Commerce and the Business Roundtable, wrote in the Sept. 22 letter. “The imposition of a financial transaction tax would run counter to achieving these objectives.”
The European Commission, the EU’s executive arm, will discuss its proposals for a transaction tax at this week’s summit in France, EU officials said last week. There is not yet strong support for a global tax, so next week’s discussions will serve as a way to keep the topic in focus for future years, the officials said.
--With assistance from Rebecca Christie in Brussels. Editors: Maura Reynolds, Gregory Mott.
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