Tax on Financial Trades Gains Support in Europe

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The New York Times
Wednesday, October 10, 2012

Tax on Financial Trades Gains Support in Europe

By JAMES KANTER

LUXEMBOURG — Italy and Spain joined nine other European Union countries on Tuesday in backing a tax on financial trades, bringing the most significant attempt at such an initiative a step closer to success.

The levy, also known as a Robin Hood tax, or Tobin tax, gained momentum in Europe in better economic times. It was originally expected that the revenue would mostly go to humanitarian and environmental causes, including ways to combat climate change. Since the outbreak of the financial crisis, the emphasis has shifted.

European officials now mainly see the tax as a way of penalizing the financial sector and returning some of the money that was spent on bank bailouts to citizens squeezed by austerity and the economic slowdown.

“I think that taxpayers have legitimate expectations that they will be paid back for what was used in the bailouts, and the financial transactions tax can provide for this,” Algirdas Semeta, the European commissioner for taxation, said Tuesday after a monthly meeting of European Union finance ministers, where a number of nations pledged their support.

“Many citizens are angry about these problems over the causes of the financial crisis, and this small contribution of very tiny rates could help rebuild confidence in the financial sector,” Mr. Semeta said.

A qualified majority of all 27 European Union finance ministers would have to approve the measure for the tax to take effect among those nations that support it. Mr. Semeta said that step could be taken at the next meeting of the finance ministers, in November.

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