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The European Parliament in Strasbourg: MEPs last night voted to encourage the European Commission to introduce a tax on financial transactions. Christian Lutz/AP
Tobin Tax

MEPs back plans for tax on financial transactions

The European Parliament gives its backing to a ‘Tobin Tax’ on all transactions, asking Brussels to investigate the €200bn plan.

THE EUROPEAN PARLIAMENT has given its strong backing to plans to implement a new tax on all financial transactions – a move aimed at making banking institutions make a financial contribution towards the cost of repairing the European economy.

MEPs voted last night by a margin of 529 votes to 127 to give their backing to the plan, which encouraged the European Commission to investigate the feasibility of the plan, though the suggestion is not binding.

The Financial Times this morning reports, however, that the Commission is itself against the idea, believing the idea of pursuing such a tax on a pan-EU basis was “premature”.

Though a Commission spokesman said the tax was a good idea, the tax was “necessary at a global level”. The Commission agreed to float the idea, however, with the G20 association of developed economies later this week.

Crucially, however, the Daily Telegraph notes that the internal markets commissioner Michel Barnier – who succeeded Charlie McCreevy in 2009 – has given his blessing to the idea.

Brussels’ comments came after MEP Martin Schulz, who had proposed the idea to the parliament in Strasbourg, said the tax would “send out an institutional signal saying that the private sector bears its part of the responsibility for the crisis”.

The Irish Times’ Conor Pope estimated that the tax could see banks across the 27 member states stump up as much as €200bn a year in taxes, levied at 0.05 per cent of the value of the transaction.

Labour’s former Munster MEP Alan Kelly, who takes his seat as a TD for Tipperary North today, said the vote sent “a strong message that the private sector must carry much of the responsibility for the financial services crisis”.

The proposal also encourages the creation of a common ‘Eurobond’ for Eurozone countries.