David Jetuah, Accountancy Age, Thursday 7 October 2010 at 15:49:00

The financial sector needs to make a fair contribution to public finances, European Commision says

The European Commission has added its voice to calls for banks to face higher taxes because of the huge profits they make.

Working on the basis that the financial sector needs to make a fair contribution to public finances, and that governments urgently need new sources of revenue in the current economic climate, the EC put forward a two-pronged approach.

"At global level, the commission supports the idea of a Financial Transactions Tax which could help fund international challenges such as development or climate change," the EC said.

At EU level, the EC is pushing for a Financial Activities Tax.

If carefully designed and implemented, an EU FAT could generate significant revenues and help to ensure greater stability of financial markets, without posing undue risk to EU competitiveness, the EC said.

The commission will present these ideas to the European Council at the end of October and to the G20 Summit in November 2010.

Algirdas ?emeta, commissioner for taxation, customs, anti-fraud and audit, said:

"There are good reasons for taxing the financial sector, and feasible ways to do so.

"I believe that the ideas that the commission has put forward today are the right ones to ensure that the financial sector makes a fair contribution to the most pressing EU and global challenges."

Further reading:

Darling admits bank bonus tax 'failed'