Budget Commissioner: EU Might Levy Tax on Finance

Polish EU commissioner Janusz Lewandowski, who holds the Budget and Financial Programming portfolio, has announced novel ideas for an EU own direct tax this week. Photo by the EC.

The EU budget commissioner Janusz Lewandowski revived the recently scrapped idea of EU levying some form of tax on financial institutions.

Speaking to defend his proposal launched Monday for the introduction of an EU direct tax, Lewandowski said that among the options envisioned by him a tax on the financial sector will have the best outlook for becoming reality, reports EUobserver.com.

The idea for a EU tax on financial transactions or “bank tax” emerged in the wake of the global financial crisis, but failed to materialize when it did not win adequate support by EU greats France and Germany this spring, in spite of being greatly supported by the European Parliament.

The Polish European Commissioner on Budget and Financial Programming justified his overall proposal for the introduction of a EU direct tax with the need experienced by member states to be relieved from the burden of making payments to the EU budget. The budget commissioner's idea is that money from the future tax to flow directly in to the EU budget, thus eliminating part of contributions that member states must make yearly.

Speaking for the Polish Press Agency (PAP), Lewandowski said he expected the levy to generate EUR 30-40 B per year.

He further claimed that member states' finance ministers are reviewing the opportunity, in spite of opposition from governments.

EUobserver further reports that French minister for European affairs Pierre Lellouche joined the camp of opposers on Tuesday, saying that an EU tax will raise “fundamental political issues” and involve “a very significant transfer of sovereignty.” Lellouche further argued that such a tax will actually burden, not relieve governments in a time of crisis and budget stringency.

EUobserver reports that among member states only Belgium and Poland have voiced support for the idea of an EU direct tax. Belgium is nevertheless the country that holds the EU rotating presidency till the end of 2010.

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