EU Finance Ministers Are Lukewarm About Tobin Tax

by Ulrika Lomas, Tax-News.com, Brussels

24 September 2001

In a statement issued at the end of the weekend ECOFIN meeting of EU finance ministers in Liege, Belgium it was announced that the Belgian presidency of the EU has asked the European Commission to produce a report on the pros and cons of the so-called Tobin tax on financial transactions as part of a wider study on the impact of globalisation. The study will also cover alternative proposals to the Tobin tax for methods of countering speculative activity in the financial markets and financing third world development.

After French Prime Minister Lionel Jospin recently spoke out in favour of the Tobin tax as a way of offsetting any negative fallout from globalisation, he and German Chancellor Gerhardt Schroder agreed to put the issue on the ECOFIN agenda.

However, most finance ministers and economists have been unanimously against the tax, saying that what might have been appropriate in 1972 when it was first mooted by Professor James Tobin, it simply wouldn't work in today's liberalised global markets. French Finance Minister Laurent Fabius said ministers at the meeting over the weekend responded "with a great deal of reserve" to the idea of the tax. Luxembourg Prime Minister and Finance Minister Jean-Claude Junker added, "No minister supported the Tobin tax."

EU officials will now prepare a report in time for the meeting of the European Council in Ghent in December.

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