After today’s State of the Union address by Commission President Barroso and the ECOFIN ministers’ meeting, European Institutions failed to deliver a clear message on a Financial Transaction Tax (FTT). The Party of European Socialists (PES) had demanded a speedy decision on a FTT to help raise new revenue, as the effects of public budget cuts begin to be felt.

In the first-ever speech on the state of the Union, European Commission President Barroso failed in his attempts to clearly signpost a fair way out of the crisis. Speaking to the European Parliament in Strasbourg, Mr. Barroso did not give convincing details about how the Commission plans to tax the financial sector and instead vacillated between the concepts of a financial transaction tax or a financial activities tax.

Meanwhile, EU Finance ministers meeting in Brussels were unable to deliver a decision on a concrete financial tax. Two proposals remain on the table: a FTT and a Financial Activities Tax (FAT). The only commitment, undertaken by the European Commission representatives at the meeting, was to issue new communications in October.

“The conservatives have the tendency to hesitate in crucial moments. Earlier this year, Mrs. Merkel and Mr. Sarkozy delay in helping Greece cost the EU millions of euros. Now, Mr. Barroso and the Council have failed to deliver a clear message on a much needed tax on financial transactions. Instead of constant hesitation we need a firm commitment to tax those responsible for the crisis. Instead of an austerity-only approach we urgently need new resources to invest in growth policies –the FTT is part of the solution”, said PES President Poul Nyrup Rasmussen.

Mr. Rasmussen was keen to stress that there was an enormous difference in potential revenue depending on whether a FTT or a FAT is the mechanism agreed. A 0.05% FTT would raise roughly 200 billion euros per year in Europe, whereas a FAT – a tax levied on the sum of profit and remuneration of financial institutions – has a much lower potential: around 10 billion per year.

The PES participated this morning in an action outside the ECOFIN meeting to emphasize the importance of implementing a FTT.

PES representatives noted the references made by Mr. Barroso to what were termed ‘project bonds’. The concept is close to the Eurobonds idea long advocated by the PES.

For further information please contact Brian Synnott on +32 474 98 96 75 (brian.synnott@pes.org)

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