08 Oct, 2010

European Union Tax

The European Commission has announced a new proposal to make banks pay for their own bailouts in the future. Instead of a transactions tax, the EU has now put forward a Financial Activities Tax to support governments. A European Union tax on bank profits and remuneration could raise as much as 25 billion euros ($34.97 billion) annually for cash-strapped governments to repair their economies, the bloc’s executive said on Thursday. The Commission was advocating FAT as an alternative to a tax on financial transactions such as stock and bond trades, as called for by Germany and France. EU Tax Commissioner Algirdas Semeta said an activities tax would make the sector more stable, raise more revenue and tax financial services more fairly as they are largely exempt from value added tax. A FAT on total remuneration and profit could raise 25 billion euros for a tax rate of 5 percent, the Commission said, while one industry publication has calculated that European banking profits totalled 93 billion euros in 2009. The Association for Financial Markets in Europe (AFME) said the financial sector remains a major contributor to tax revenues through corporate and employment taxes on the hundreds of thousands of people that it employs. Credit: Reuters/BBC/de-world.de/apd

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