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G20 Goes Cold On FTT

by Ulrika Lomas,, Brussels

22 June 2012

French Socialist President François Hollande has failed, where his predecessor Nicolas Sarkozy last year succeeded, in getting the introduction of a tax on financial transactions onto the final communiqué of the latest G20 summit meeting in Los Cabos.

Yet despite this clear setback, President Hollande underlined his confidence that such a levy on financial transactions could be “rapidly” implemented from 2013, within the framework of enhanced cooperation.

During the final press conference at the G20 summit, the French President said that he had high hopes that on the basis of enhanced cooperation, among some countries, a tax imposed on financial transactions could rapidly enter in force, next year.

Underscoring that it is the “responsibility” of a certain number of countries who support the tax to press ahead with its introduction, Hollande pointed out that the issue would be discussed at the upcoming European Council meeting at the end of June.

Hollande emphasized his confidence in the process, given that there is currently a consensus within Europe on the need for growth, for a banking union, as well as for solidarity and budgetary responsibility.

The French President also made known his intention to insist that the all revenues from the tax are used to exit the eurozone crisis.

In contrast, following the G20 summit in Cannes in November 2011, former French President Sarkozy welcomed the progress made at the meeting as regards support for a financial transactions tax to finance development, which was acknowledged in the final communiqué.

Underlining the fact that France was initially isolated on the levy, President Sarkzoy explained at the time that a growing number of nations and bodies had stated an interest in joining France to support the principle of a tax imposed on financial transactions, including the European Commission, Germany, Spain, Argentina, the African Union, Ethiopia, South Africa, Brazil and the United Nations.

The French President alluded to the precise wording in the G20’s final communiqué, which stated:“We acknowledge the initiatives in some of our countries to tax the financial sector for various purposes, including a financial transaction tax, inter alia to support development.”

France, Sarkozy stressed, would continue to fight for the tax to become a reality. Waiting for the rest of the world to introduce the levy is not a sufficient argument to refuse to implement it, he stressed.

Concluding his statement, President Sarkozy also welcomed the willingness of US President Barack Obama to envisage the idea of a contribution from financial actors to resolve and to exit the crisis, while conceding that this did not extend to a tax on financial transactions.

Sarkozy also acknowledged that several issues still needed to be resolved, notably the precise allocation of the revenues from the future tax. France, he said, considered that the majority of the tax should flow towards development.

TAGS: South Africa | tax | European Commission | interest | banking | capital markets | tobin tax | Ethiopia | Brazil | France | Germany | Spain | G20 | Argentina | Europe | Africa

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