Monday, July 11, 2005

They all want to tax financial transactions

You’d think with the EU and the eurozone in particular in economic doldrums, they would start thinking of ways that would encourage the financial sector among others.

Not a bit of it. All we hear is about wonderful projects that could be funded by taxing international financial transactions. First we had President Chirac telling us that such a tax should be levied to fight against AIDS. A worthy cause, naturally, but how would slowing down economic growth in the west help it remains a mystery.

Would money raised from a tax on financial transactions overcome Thabo Mbeki’s inexplicable attitude to the whole subject, he announcing periodically that the various diseases were simply a western plot against Africans, as were the treatments that must not be used?

Would such a tax prevent numerous African governments from taxing drugs, supplied for free or at cost price, at the retail level?

Austrian President Schüssel, who is already looking to taking over the Presidency from Blair in January, has found an even better cause: the EU.

It is intolerable, he explained to the German Bild am Sonntag that the EU should rely on member states for its budget. It should have its own source of cash and what better source than a tax on international financial transactions.

Of course, it is unlikely that financial markets or the United States, or, for that matter, Britain or, presumably, Switzerland, would agree to such a tax. Still, it is an interesting foretaste of what we can expect from the Austrian Presidency – a fight with France, perchance, about what to do with a non-existent and completely unacceptable tax.

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