Bloomberg News

EU Commissioner Pushes Transactions Tax Cameron Calls ‘Madness’

January 29, 2012

Jan. 27 (Bloomberg) -- The European Commission is committed to a financial transactions tax even after the U.K. stepped up its opposition to the proposals.

“Taxpayers have legitimate right to expect that the financial sector will make a fair contribution to public finances,” Algirdas Semeta, the commissioner for taxation, said in an interview in Brussels today. “We will continue to push and to promote this proposal and to place counter-arguments to the arguments of those who misinterpret our impact assessments.”

The commission, the European Union’s executive body, has proposed a bloc-wide tax that it says could raise 57 billion euros ($74.5 billion) a year. An impact assessment accompanying the proposal says that the plan would erode gross domestic product by 0.5 percent over the “long-run.”

The U.K. has led opposition to the levy, saying it would be ineffective unless applied globally. Prime Minister David Cameron said yesterday at the World Economic Forum in Davos, Switzerland that it’s “madness” to even consider introducing a Europe-wide tax on financial transactions at a time when governments are struggling to revive their economies.

German officials are preparing alternative proposals for a form of European stamp duty on shares, similar to a tax the U.K. already has in place. France’s top financial regulator has warned the commission’s plan could penalize that country’s asset managers.

The commission’s plan would cover a broad list of financial instruments and include the secondary bond market and repurchase agreements, Semeta said, without providing further details. Some member states want to discuss the proposals at the next meeting of EU finance ministers, Semeta said.

--With assistance from Rebecca Christie in Brussels. Editors: Edward Evans, Francis Harris.

To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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