FTT: Parliament's message is clear - we need common system for taxing financial transactions. Sirpa Pietikäinen MEP / 23-05-2012
Today, the European Parliament adopted the Report on a Common System for Taxing Financial Transactions. Sirpa Pietikäinen MEP, EPP Group Shadow Rapporteur, has welcomed the result of the vote: "With the Report being adopted today, the Parliament is sending a signal to the Council: the Financial Transaction Tax has broad support", said the Finnish MEP.
"The rationale behind the FTT is one that is most supportable: it is only fair that the financial sector participates more in carrying the burden of this devastating financial crisis", recalled Ms Pietikäinen. She also believes that the FTT would help curb speculation, encourage the more long-term investments and reduce the pressure to increase other taxes. This would all, in turn, contribute to future financial stability.
The FTT, as suggested by the Commission and backed by the Parliament, is based on the so-called residence principle, meaning that the taxation applies to all financial transactions, on the condition that at least one party to the transaction is established in the EU. Tax would be paid by financial institutions. Ms Pietikäinen pointed out that it is indeed the residence principle that makes tax avoidance extremely difficult and also makes it possible to include the taxation of derivatives into the scope of the tax.
"The prerequisite for the FTT to deliver the expectations set on it, is for it to apply to all financial transactions, something which would not be reached, e.g. using the stamp duty model that would leave out the most speculative transactions", she said.
The suggested tax rates are low: 0.1% for financial transactions other than derivatives, and 0.01% for derivatives agreements. "It is important to underline that most day-to-day transactions by our consumers, such as insurance contracts, mortgage lending, consumer credits and payment services, are excluded from the scope of this tax", underlined Ms Pietikäinen.
On the field of taxation, the Parliament has an advisory role. The decision must be made unanimously in the Council.
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