EU finance ministers must stand up to the Commission on FTTs, say socialists

Financial transactions tax

By Poul Nyrup Rasmussen MEP

13 April 2010

This article by the President of the Party of European Socialists (PES), former Danish Prime Minister Poul Nyrup Rasmussen MEP, argues that the Finance Ministers of Europe, meeting in Spain this Friday, should support a Financial Transactions Tax. The PES is organising a day of action to support the idea on Saturday 24 April, and have released a video called Vandal Banker to publicise the day.

'This Friday, European Union Finance Ministers will hold an informal meeting in Madrid. Having finally, at the third attempt, developed the courage to set out a concrete plan to aid Greece, it is now time for them to turn to the fundamental restructuring that the European financial services system needs. One way the Ministers can tackle the long-term weaknesses and, at the same time, send a positive message to EU citizens that they have learned the lessons of the crisis, is to take seriously the calls for a Financial Transaction Tax (FTT), or 'Robin Hood' tax.

'The pressure will be on these Finance Ministers because the calls are not just coming from concerned citizens and campaign groups, but also from the European Parliament. In March, the Parliament voted massively in favour (536 votes out of 736) of a joint EU position on the FTT. They also voted for a percentage of the funds generated by the tax to go towards global development projects, as well as poverty reduction and public service support.

'And yet the agents of conservatism are already on the march against this idea. The European Commission, lead by President José Manuel Barroso, has published a 'working document' which attempts to dismantle the idea of a Financial Transaction Tax. By wilfully distorting the figures the document, entitled 'Innovative financing at a global level', is a clearly pre-prepared negative response by the Commission to the calls from the Parliament. My friend, Udo Bullmann MEP (S&D spokesperson for economic affairs) has already called the Commission document 'an insult'.

'We have called on our good friend Elena Salgado, the Spanish Finance Minister, who will chair the discussions, to provide the strong, socially responsible leadership needed to make a breakthrough on FTT. Our trade union friends in the European Trade Union Confederation (ETUC) have taken similar measures.

'We want the rate of the tax to be set at 0.05%. This way we target only the speculators, who obsessively and compulsively indulge in rapid minute by minute micro-trading. This scrabbling in the margins of the financial system adds nothing to the real economy, nothing to job growth and nothing to a sustained recovery. All it does is create bloated salaries for the lucky few. The least they can do is pay some small contribution to a wider recovery.

'We need the Finance Ministers to take this positive measure now. The best way to send a message that the time for an FTT has come is for the accountable, democratically elected Finance Ministers to say so.

'Think of the recent EU events. A mechanism has been agreed that would provide possibly 50 billion euros in loans to Greece, 15 billion of which would come, with a heavy burden, from the IMF. And yet are we seriously thinking of saying to citizens that we are not considering a new tax that would provide a new annual revenue stream of up to 200 billion euros? How would that go down in Greece, or in Portugal, Spain or Ireland for that matter?

'People are starting to realize that this crisis is not going away any time soon. EU Member States' debt continues to pile up. More and more people fear that the next knock on the door could be to tell them that they've lost their job. The fear is doubled when they see that the public safety-net against the unemployment drop is becoming more and more threadbare. Public services, including social assistance, are under attack like never before - despite having nothing to do with the crisis.

'People want to see strong signals from their political leaders that the lessons of the crisis are being applied. It is slowly but surely dawning on European citizens that the years of financial mistakes have lead to a system that is fundamentally flawed and riddled with socially, and economically, useless manipulations of the system.

'The attitude must change. The crisis is not over because the finance system says so. A public deficit problem is being matched by our leaders' attention deficit. It is up to us to remind them that only real structural change can guarantee a route out of this crisis. The time has come for a Financial Transaction Tax.'