EC Report Says Tobin Tax 'Unrealistic'

by Ulrika Lomas, Tax-News.com, Brussels

14 February 2002

The European Commission has released a report stating that the imposition of the 'Tobin tax' or sales tax on cross-border currency transactions would be an unrealistic move. However, the report does not have the unanimous support of the EC, and several commissioners think that the idea may become completely buried due to the technical difficulties which would be involved in the launch of such a tax.

The study on the effects of globalisation and the financing of development was unveiled on Wednesday, and stressed the need for a multilateral approach to the problems associated with increasing globalisation.

The report was comprised of a technical paper on the development of a global strategy for sustainable development, suggestions for fiscal measures to assist in the financing of this cooperation (in which the possibility of introducing the Tobin tax was examined), and a paper on financing development cooperation.

European Finance Ministers are still deeply divided on the issue, however, and although the majority oppose the idea of a tax on currency transactions, French Prime Minister, Lionel Jospin has come out in strong support of the measure, and German Chancellor Gerhard Schroder has expressed measured support.

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