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The European Commission has set out its ideas for the future taxation of the financial sector.
Working on the basis that the financial sector needs to make a fair contribution to public finances, and that governments urgently need new sources of revenue in the current economic climate, the commission proposes a two-pronged approach.
At global level, the commission supports the idea of a financial transactions tax. This would tax every transaction based on its transaction value, resulting in substantial revenues.
The commission believes that a well-implemented, internationally-applied financial transaction tax could be an attractive way of raising the necessary funds for important global policies such as development or climate change.
At EU level, it recommends that a financial activities tax would be the preferable option.
This would target the profits and remunerations of financial sector companies, thus taxing the corporations, rather than each party involved in a financial transaction.
If carefully designed and implemented, an EU financial activities tax could generate significant revenues and help to ensure greater stability of financial markets, without posing undue risk to EU competitiveness.
The Commission will present these ideas to the European Council at the end of October and to the G20 Summit in November.
