France pushes for financial transaction tax
Adriene Hill: European leaders are meeting today in Brussels. Their talks are focused on working together to solve the debt crisis, manage a likely Greek default, and to balance their budgets. But one country is going it alone, at least on part of the plan. France has proposed a new tax on the banks, charging them a little bit for every financial transaction.
The BBC’s Andrew Walker explains what exactly the financial transactions tax is.
Andrew Walker: President Sarkozy has some big problems to tackle. Among them, his government is running a budget deficit. This financial transactions tax is labelled by some as a “Robin Hood Tax” — as in it steals from the rich and gives to the poor.
Nicolas Sarkozy: We hope the tax will generate one billion euros of new income and and thus cut our budget deficit. What we want to do now is to push others into taking action by giving them an example.
In this case, the French president didn’t spell out exactly what would be taxed, but officials have said it will be trading in shares of stock, not bonds. And the French hope to set an example that will lead to other European countries to adopt a similar tax.
French banks oppose going it alone, fearing they will lose business, perhaps to London. Britain already has a tax on share trading, but will not go along with a levy on other types of transactions.
Political observers note President Sarkozy also faces an election and he’s currently trailing in the opinion polls. Taxing the banks will be popular, and President Sarkozy says it will make a useful contribution to fixing the government finances.
I’m the BBC’s Andrew Walker, for Marketplace.
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