A European financial transaction tax

Levying a taxing on financial transactions is a good way of curbing some forms of financial speculation.

It also makes the big banks, which played a part in causing the financial crisis, pay their share.

And it generates additional public revenue that can then be used to protect global public goods, e.g. to combat climate change or foster development.

For these reasons, civil society groups campaigned for a financial transaction tax (FTT) for over 10 years.

However, lawmakers rebuffed them until the European Commission changed its position and even Conservatives in some Member States began to support the idea.

The Greens believe that a suitably designed FTT will be a highly emblematic and useful tax that should cover practically all transactions by big banks and other financial institutions, like hedge funds or pension funds.

Revenue generated by the FTT should flow into the EU budget to strengthen its foundations and avoid the kind of political insecurity experienced in the past during EU budget negotiations.

Such a tax could also lower the Member States' contribution to the EU budget, and once absorbed into the EU budget the revenue it generates can serve to finance global public goods.

The Greens succeeded in improving the Commission proposal in several respects.

We made sure that banks would be unable to avoid the tax by moving to other financial centres. So if a bank is legally domiciled in the EU it will have to pay regardless of where its trades are transacted.

We also introduced an amendment on the use of FTT revenue for global public goods and backed the idea of some Member States starting to implement the FTT even if others do not support it.

The Greens did not manage to secure the use of the proposed FTT as a deterrent against risky high-frequency trading.

We wanted not only executed, but also cancelled orders to be taxed, because subsequently cancelled orders can distort markets. We also regret the EPP's and ALDE's imposition of an exemption for pension funds.

In our view, both these groups failed to understand that, far from harming pension funds, an FTT would make pensions more secure by helping them have a less volatile, less risky portfolio.