Austria Supporting Bank Tax

by Ulrika Lomas, Tax-News.com, Brussels

13 May 2010

Following the recent decision by members of the European Union (EU) to provide a rescue package for Greece, Austria’s Chancellor Werner Faymann announced that further measures are now needed in order to prevent a repeat of events, including the introduction of a financial transactions tax.

While acknowledging that members of the EU and the euro zone reacted properly and promptly to prevent a collapse of the euro, Chancellor Faymann warned that extinguishing the burning problem did not mean resolving it, arguing that far-reaching measures are still needed.

Faymann explained that any budgetary problems that the countries concerned may face are being rendered almost unsolvable as a result of speculation. Consequently, Faymann underlined the need for action to be taken both at national level as well as within the EU, calling for new rules to be created for the financial market, which he considers to have become far removed from the real economy, and for a tax to be levied on financial transactions. Given certain ongoing resistance to any new measures, Faymann highlighted the need to step up pressure within Europe.

Faymann noted that Austria’s Finance Minister Josef Pröll also supports the idea of further measures, adamant that the introduction of a financial transactions tax and the regulation of hedge funds are both necessary.

Highlighting the importance of consolidating the country’s budget, Faymann nevertheless warned that the issue of growth should not be neglected, explaining that instead of financing unemployment, it is better and more just to invest in the growth of the economy.

To this end, Faymann pointed out that part of the means to finance investment should be derived from a bank levy imposed on financial institutions, particularly given that both the government and the national bank ploughed enormous sums into saving various banks. Faymann underlined that both he and Finance Minister Pröll recognized the need to introduce a bank tax and were in agreement that EUR500m should flow from this levy into the country’s budget.

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