Now the EC backs a 'Fat' tax on banks

Europe has thrown its weight behind a tax on banking activities that officials say could raise €25bn (£22bn).

The European Commission said yesterday that banks were "under taxed" and should pay more to repair the economies that they damaged during the financial crisis.

The commission outlined its stance as European banking watchdogs prepare to impose tougher-than-expected rules on bankers' bonuses, despite warnings from some officials and industry groups that this could damage the continent's competitiveness against Asia and the US. They are thought to be leaning towards a cap on bonuses based on a multiple of an individual's salary.

The European Commission said it backed plans for a global financial transactions or "Tobin tax", after James Tobin, the economist who came up with the idea. However, it accepted that such a tax needed to be implemented globally to avoid business shifting out of Europe to avoid it.

The commission, however, said a second financial activities, or "Fat", tax should be considered in Europe, targeting pay and profits at financial companies. Algirdas Semeta, commissioner for tax, customs, anti-fraud and audit, said: "There are good reasons for taxing the financial sector, and feasible ways to do so. I believe that the ideas that the commission has put forward today are the right ones to ensure that the financial sector makes a fair contribution."

The commission's ideas, however, could still prove difficult to implement on an EU-wide basis given that taxation in general remains an issue for member states. Britain, along with other EU members such as Germany, is already planning a "banking levy" of its own.

Nonetheless, campaigners welcomed the commission's statement. Max Lawson, a spokesperson for the Robin Hood Tax campaign, said: "The EC has responded to the public mood and has taken a significant step towards a Robin Hood Tax. Taxing big finance makes sense: it can curb dangerous casino capitalism whilst raising tens of billions to pay down our deficit and provide much-needed money for the fight against poverty and climate change here in Europe and around the world. Today's FAT tax proposal could mean as much as £4bn for the UK."

The Association for Financial Markets in Europe (AFME) said the financial sector is a major contributor to tax revenues through corporate and employment taxes on the thousands of people that it employs.

On bonuses, Angela Knight, head of the British Bankers' Association, said: "We need to look across the Atlantic to the US, and east towards Asia, to ensure that changes are imposed sensibly everywhere. If they do not, then the result will be significant difficulties for businesses in Europe."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine