European Commission approves in principle tax proposal, presents eurobonds
28 Sep 2011
The European Commission (EU) has approved in principle a financial transaction tax on all EU member states. EU President Jose Manuel Barroso said banks must "make a contribution" as Europe faced its "greatest challenge".
"We are today faced with the greatest challenge our Union has known in all its history," Barroso said, adding that it was necessary to overcome the crisis.
The tax would raise about €57 billion ($78 billion) and would come into effect at the start of 2014.
The financial tax would be levied at a rate of 0.1 per cent on all transactions between institutions when at least one party is based in the EU. Derivative contracts would be taxed at a rate of 0.01 per cent.
Barroso said that over the last three years, members of the 27-nation bloc had granted aid and provided guarantees of 4.6 trillion euros to the financial sector in the aftermath of the 2008 global crisis.
The commission said the tax was "to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the member states".