EU assembly backs bank transaction tax

City A.M. Reporter
European Union lawmakers have overwhelmingly backed a call to tax financial transactions and make banks pay up to €200bn (£172bn) for the economic damage they caused.

The 529-to-127 vote is non-binding but its call for legislation will be hard for the EU Commission to ignore.

"We want to send out an institutional signal saying that the private sector bears its part of the responsibility for the crisis," Martin Schulz, the leader of the group of legislators from the socialists and democrats, told parliament.

The EU should push for a global transaction tax but, "failing that, the EU should implement a financial transaction tax at the European level as a first step", the resolution said.

The Commission should swiftly produce a feasibility study and come forward with concrete legislative proposals, it added.

A tax that would cover transactions such as derivatives would reduce speculation and public deficits, parliament's resolution said.

An 0.05 per cent tax would bring in nearly €200bn in the EU, rising to €650bn at the global level.

France and Germany have already pushed for a global transaction tax at G20 level, but faced opposition from the United States and Canada.

It is often referred to as a Tobin Tax, after the US economist who promoted it in the 1970s.

A less ambitious push for an EU-level transaction tax has made little headway so far and German Chancellor Angela Merkel's party has suggested a transaction tax for some or all of the 17 eurozone countries as a starting point.

A Commission official said the executive will publish its impact assessment on taxes before the summer break.