Europe moves towards financial sector tax

By Alex Stevenson

European Commission president Jose Manuel Barroso is seeking the financial transaction tax (FTT) called for by 'Robin Hood' campaigners.

His 'state of the union' address delivered earlier today featured an announcement that he was publishing a draft directive introducing an FTT.

Britain is likely to oppose the move, given the UK economy's reliance on the financial sector.

But Mr Barroso argued that the proposal, approved by the commission, was justified given the huge financial support lent to the sector in recent years.

"In the last three years, member states have granted aid and provided guarantees of 4.6 trillion euros to the financial sector," he said.

"It is time for the financial sector to make a contribution back to society."

The TUC hailed the announcement as a major breakthrough for those campaigning for a 'Robin Hood' tax.

"This is a major step forward and I urge the British government to support it," general secretary Brendan Barber said.

"An FTT would provide much needed revenue for tackling climate change, global poverty and cutting public sector deficits.

"It would also help rebalance the economy, address the under-taxing of the financial sector, and reward long-term investment."

Oxfam International warned that an FTT would not be a Robin Hood tax unless commitments were made to use the revenues for tackling climate change and poverty, however.

"The FTT is moving from rhetoric to reality but a significant part of the revenues should be used as Bill Gates suggested, to help poor countries facing chilling reductions in aid, trade, and investment – not just shore up the EU budget," policy advisor Nicolas Mombrial commented.