A FINANCIAL transaction tax which would secure some €55 billion a year has been formally proposed by the president of the European Commission, José Manuel Barroso.
Mr Barroso said yesterday that member states had granted aid and provided guarantees worth €4.6 trillion to the financial sector in the last three years. It was “time for the financial sector to make a contribution back to society”.
Delivering his state of the union address, he told the European Parliament in Strasbourg: “Today, the commission adopted a proposal for the financial transaction tax. Today I am putting before you a very important legislative text.”
Mr Barroso also said he wanted to see the creation of euro bonds as well as the bringing forward of a €500 billion permanent rescue fund to show EU determination to stamp out the debt crisis.
Due to be set up in mid-2013, the European Stability Mechanism (ESM) will yield a €500 billion war chest that could be used more flexibly than the current guarantee-based, temporary financial backstop. “We should do everything possible to accelerate the entry into force of the ESM,” Mr Barroso told MEPs.
He also called for strengthening of the European Financial Stability Facility (EFSF), which, he said, must immediately be made both stronger and more flexible.
“Only then will it be able to deploy precautionary intervention, intervene to support the recapitalisation of banks, intervene in the secondary markets to help avoid contagion.”
Mr Barroso said the commission would “trust that the European Central Bank, in full respect of the treaty, will do whatever is necessary to ensure the integrity of the euro area and to ensure its financial stability”.
The EU needed “to complete monetary union with an economic union”. It had been “an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policy”, but it was now important to avoid “another illusion that we can have a common currency with an intergovernmental approach [to resolving the financial crisis]”.
He said proposals for euro bonds would be advanced by the commission “within weeks” and, while “fully fledged” euro bonds would require changes to existing EU treaties, there was much that could be done under the existing Lisbon treaty. The treaty issue “should not be an excuse to delay”.
“Once the euro area is fully equipped with the instruments necessary to ensure both integration and discipline, the issuance of joint debt will be seen as a natural and advantageous step for all.”
Mr Barroso also welcomed moves by the parliament to agree additional oversight of member states’ budgetary policy.
Under a package of measures referred to as the “six pack”, the parliament voted to give the commission a greater say in national budgetary policy and prevent member states from ignoring commission recommendations to tackle economic imbalances promptly.
