Here it is at last: the debated proposal for a Directive on a common system of financial transaction tax. This type of tax was initially proposed by the economist James Tobin.
The idea is to tax a great number of financial instruments – including instruments which are negotiable on the capital market, money-market instruments (with the exception of instruments of payment), units or shares in collective investment undertakings (which include UCITS and alternative investment funds) and derivatives agreements. The tax rates will be set by Member States, but must not be less than 0.1% of the taxable amount in most cases.
According to the Commission the new tax will have progressive distributional effects, i.e. its impact will increase proportionately with income, as higher income groups benefit more from the services provided by the financial sector.
The Commission has put forward its proposal for the new Multiannual Financial Framework of the European Union for the period 2014-2020. The Multiannual Financial Framework is the main budgeting document of the EU for the seven-year period, and little can be changed once it is adopted. The proposal has to be approved by the Member States and the Parliament.
The main innovations:
- A new fund for financing infrastructure, the Connecting Europe Facility that includes a preliminary list of transport, energy and ICT projects;
- Stronger link of cohesion financing with the Europe 2020 objectives;
- New category of ‘transition regions’;
- New conditionality provisions;
- Partnership contracts with each Member State to ensure mutual reinforcement of national and EU funding;
- An integrated programme of €15.2 billion for education, training and youth, with a clear focus on developing skills and mobility;
- A common EU strategy called “Horizon 2020” for investment in research and innovation worth 80 billion €;
- 30% of direct support to farmers will be conditional on “greening” their businesses;
- €4.1 billion for the fight against crime and terrorism and €3.4 billion for migration and asylum policies.
- New own resources for financing the budget- a financial transaction tax (Tobin tax) and a new modernized VAT;
- Simplification of the existing correction mechanisms.
You can also read the critical assessment of the proposal by Charlemagne. Real Time Brussels looks at the fierce political battles that will likely emerge in the process of adoption of the Multiannual Financial Framework.
Posted in Agriculture and Fisheries, Budget and Finance, Education, Science and Culture, Energy, Enterprise, Environment, Foreign and Security Policy, Institutional Affairs, Justice and Internal Affairs, Regional Policy, Taxes and Duties, Transport
Tagged 2014-2020, cohesion, EU funds, Europe 2020, European Commission, European Union, infrastructure, management and control, Multiannual Financial Framework, own resources, Tobin Tax