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Commissioner Šemeta sets out the “Key options for innovative financing in the EU”

In his speech on 10 January 2011 to the Committee on Economic and Monetary Affairs (ECON) in the European Parliament in Brussels, Commissioner Šemeta spoke on initiatives in financial sector taxation, carbon taxation and Eurobonds.

Financial Sector Taxation

In this field, the Commissioner set out objectives of financial sector taxation:

  • To ensure that the financial sector is making a fair and substantial contribution to public finances
  • To complement financial sector regulation in correcting undesirable behaviour for society in this area, without undermining EU competitiveness
  • to avoid a patchwork of divergent national financial sector taxes which could create new obstacles to the Single Market

A Financial Activities Tax (FAT) appears to be a promising option according to Commissioner Šemeta as it could ensure that the financial sector is taxed fairly and generates much-needed revenues. The Commissioner went on to say that the introduction of a FAT could ensure greater stability of financial markets by taxing profits and salaries including bonuses to deter excessive risk-taking.

At global level, the Commission supports further exploration and development of a Financial Transaction Tax and will work with the French Presidency of the G-20 in order to promote an agreement with the most relevant international partners. By summer 2011, the Commission services will prepare an Impact Assessment and scrutinise the cumulative impact on financial institutions of new regulation, bank levy and taxes.

Carbon Taxation

The Commissioner noted the ECON Committee's support for a comprehensive revision of the energy taxation directive to make CO2 emissions and energy content the basic criteria for the taxation of energy products.

The revision of the Energy Taxation Directive has two main objectives according to the Commissioner: first to create an EU framework for CO2 taxation outside the EU emission trading system and second, to rationalise existing taxes on energy by linking them to the energy content to avoid distortions between different types of energy sources.

Eurobonds

Commissioner Šemeta then went on to note that the time was “not ripe” to discuss the use of Eurobonds as “a common public debt management instrument based on mutual pooling of parts of sovereign debt”. However the Commissioner concluded that work on a permanent structure for crisis instrument is ongoing and includes a limited Treaty change

The full Commission's speech is available at http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/11/5&format=HTML&aged=0&language=EN&guiLanguage=en