A tax on financial transactions will come to 10 European countries following the European Commission’s decision Tuesday to allow the so-called “Robin Hood” tax.
The head of the European Commission supports the tax and encourages the other 17 member states to follow suit—the U.K. is most vehemently opposed—saying that it could help greatly with the debt crisis.
“This tax can raise billions of euros of much-needed revenue for member states in these difficult times,” said European Commission President Jose Manuel Barroso in a written statement Tuesday. “This is about fairness: we need to ensure the costs of the crisis are shared by the financial sector instead of shouldered by ordinary citizens.”
The 10 countries that will adopt the tax include Germany, France, Austria, Belgium, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain. The commission estimated that some 57 billion euros ($74 billion) would be raised each year if it were applied across the entire EU.
It is likely to serve as another brake on economic growth.
—Simon Lewis, chief executive, The Association for Financial Markets in Europe
The U.K. said that it would unfairly target London and force financial institutions away from the city, according to a British parliamentary report issued in March. Since London is one of the world’s major financial centers, the financial transactions tax would imperil the U.K. and Europe as a whole, the report claims. Ireland also said that it will not join.
The tax entails placing a small fee on the transactions of currencies, bonds, futures contracts, options contracts, and shares that are traded at financial institutions.
The Association for Financial Markets in Europe, an organization of the largest European financial institutions, said the idea is problematic.
In a statement last month, Simon Lewis the group’s chief executive said, “It is likely to serve as another brake on economic growth, it is a highly inefficient way of raising tax, and given the negative impact on growth it could even reduce overall tax revenues in net terms.”
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