On November 10, after months of wrangling, EU member states forged an agreement with the European Parliament over the long-term budget and the recovery fund to rebuild a post-Covid Europe.
The EU will, as previously agreed, borrow heavily in the bond markets to finance the recovery at cheaper rates than most member states could in their own right. It will redistribute proceeds in grants and subsidized loans.
The latest agreement comes with new proposals on EU tax-raising powers to service these borrowings out of so-called own resources.
By mid-2021, the European Commission (EC) will put forward tax schemes based on the EU emissions trading system, a new carbon border adjustment mechanism and a digital levy.
The EC will likely propose additional new taxes, which may fall on the corporate sector and could also include a financial transaction tax (FTT).
For decades, as financial markets grew and turnover increased in equities, bonds, derivatives and foreign exchange, debate has simmered over the Tobin tax.
James Tobin, a professor emeritus of economics at Yale University who once served on president John F Kennedy’s council of economic advisers, first discussed a taxation rate of 0.05% on financial instruments in 1971, as a way to stabilize markets and reduce turnover with no socially useful purpose.
Amid
