The European Union’s tax commissioner urged U.S. supporters of a financial transaction tax to keep up their efforts and said a global tax should be a reality at “some time.”
“I believe that things can evolve,” Algirdas Semeta said today in a speech at the Center for American Progress in Washington. “Nowadays, every government needs new sources of public funding.”
So far, 11 countries have signed up to work toward the EU’s tax. The EU plan would impose a wide-ranging levy on trades of stocks, bonds, derivatives and other financial instruments, to raise revenue and discourage speculative trading.
High-frequency trading has led to transactions that “do not have any social value,” Semeta said, adding that the tax would “reorient the financial sector” around the real economy.
The U.S. Treasury Department opposes the EU tax. Payson Peabody, managing director and tax counsel at the Securities Industry and Financial Markets Association in Washington, said his group agreed because a tax could harm U.S. investors.
“The administration has consistently opposed a financial transactions tax on the grounds that it would be vulnerable to evasion, create incentives for financial re-engineering, and burden retail investors,” Jack Lew, President Barack Obama’s nominee for Treasury secretary, said in response to a written question from Orrin Hatch of Utah, the top Republican on the Senate Finance Committee.
Some Democratic lawmakers in the U.S., including Senator Tom Harkin of Iowa, support similar tax proposals. They have gained little traction in Congress.
Transaction taxes “have an outsized impact, negative impact on growth and jobs,” Peabody said. “And we think that policy makers on both sides of the aisle understand that.”
The proposed EU tax would set a rate of 0.1% for stock and bond trades and 0.01% on derivatives trades. The EU estimates that the plan could raise 30 billion euros ($40 billion) to 35 billion euros per year.
To become law, the proposal must be approved by the EU nations that agreed to consider imposing the tax. They now include Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia.