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Germany To Take First Steps Towards EU FTT

by Ulrika Lomas,, Brussels

18 June 2012

During the latest round of talks between Germany’s coalition and opposition leaders in the chancellery, the government pledged to take the first steps towards the introduction of a financial transactions tax in Europe at the upcoming meeting of European Union (EU) finance ministers in Brussels on June 22.

Leader of the Social Democrats (SPD) Sigmar Gabriel revealed that negotiations on a growth pact for Europe would take place ahead of the EU summit meeting, on June 21.

According to the SPD, the black-yellow coalition government underlined in the course of the talks its clear and full support for the introduction of a tax on financial transactions as a means with which to tax stock market trade in Europe.

The government intends to set in motion this month the first stage of its plans for a financial transactions tax imposed at European level, Gabriel said following the meeting with coalition heads on the fiscal compact.

Gabriel underlined the fact that the fiscal pact, growth measures and a transactions tax are all inextricably linked. It would simply be a waste of taxpayers’ money that has been used in rescue packages if investments are not also made in growth and employment, Gabriel added.

The SPD have been calling for the introduction of a financial transactions tax for over two years now, to stabilize the markets and to ensure that banks and speculators contribute to the costs of overcoming the crisis in the interests of fairness.

Both the SPD and the Green Party have made their adoption of the EU fiscal compact, aimed at greater budgetary discipline in Europe, conditional on both a financial transactions tax and on concrete plans to boost growth in Europe.

Aimed at ensuring greater budgetary discipline in Europe, the fiscal compact, signed by twenty-five of the twenty-seven EU member states back in March, is due to be put to the vote in Germany before the end of the month.

In connection with its plans for growth, SPD leaders recently met in Paris with France’s new Socialist President François Hollande, to unite on alternative ways in which to lead Europe out of the crisis and back on to a growth course.

Simply relying on the implementation of austerity measures will not lead to progress, Gabriel insisted, emphasizing that compelling all twenty-seven EU member states to introduce “radical savings measures” at the same time will inevitably have a negative impact. Additional growth initiatives and investment as sought by French President Hollande are vital, Gabriel stressed.

The SPD and the French President have therefore called for the drafting of a European growth and employment programme, aimed at creating growth through innovation, environmental regeneration and investment in the real economy. The financing of investment in new growth must not lead to new state debt, however, the SPD warned, stipulating that financing must be secured by means of a financial transactions tax.

TAGS: tax | investment | economics | fiscal policy | tobin tax | Germany | European Union (EU) | Europe

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