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France Votes 'Yes' To EU Tobin Tax

by Ulrika Lomas,, Brussels

20 June 2011

Marking a significant step forward, albeit largely symbolic, the French National Assembly voted almost unanimously in favour of a European resolution seeking to introduce at European level a tax imposed on all financial transactions.

The resolution provides for the introduction of a 0.05% tax levied on all financial transactions, encompassing stock market and non stock market transactions, shares, titles, bonds, derivative products as well as all transactions carried out on the currency market. The product of the tax would serve as an innovative source of financing for vital development aid and in the fight against climate change.

Eager to press ahead with the introduction of such a tax, the European parliament adopted back in March a report calling for the creation of a Tobin tax either at global or at European level. European heads of state and government subsequently pledged to push for the tax at euro zone and EU level as well as at international level.

French President Nicolas Sarkozy has led the drive for the introduction of an “infinitesimal” tax on financial transactions to finance development aid since the beginning of the year, as France assumed presidency of the G20 and G8.

During a keynote speech at the World Economic Forum in Davos in January, President Sarkozy acknowledged that there remains much disagreement and opposition to the tax and proposed establishing a “little group of leader countries” in order to put in place these finances and to keep the promises made. At the time, Sarkozy insisted that in several years, other countries would follow suit.

Indeed, up until now, Germany and Austria have staunchly defended the idea of such a tax at European level, even though a number of other European countries have warned that the levy would simply lead to a flight of capital.

However, Sarkozy’s undoubted optimism was dealt a severe blow recently as the German parliament voted to reject the European resolution, given resounding opposition from the ruling Christian Democratic Union party.

TAGS: tax | economics | capital markets | tobin tax | France | G20 | currency

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