In response, the Party of European Socialists (PES) says it is not up to the citizens to pay for the irrational behavior of financial actors. We cannot accept that 7 million citizens lose their jobs because of financial speculators. The ones that caused this crisis must be made responsible. It is for this reason that we are calling for a Financial Transaction Tax. A tax of 0.05% applied to every speculative financial transaction in Europe would generate up to 200 billion euro each year which could help minimize the effects of the economic crisis and prevent future crises. This would certainly sweeten the pill.
The idea of a FTT is not new. The PES has been at the forefront of the introduction of such a tax at the European level: in 2000, the socialists and social democrats in the European Parliament presented a resolution on the so called Tobin Tax. This was rejected at the time by the conservatives but our arguments proved to be resilient. All through 2010, socialist and social-democrat leaders pushed for an FTT at the European Council and Eurogroup meetings and we succeeded in putting it back on the agenda. Despite initial fierce resistance by the conservatives they finally had to admit that an FTT was a much needed answer to the crisis we are going through.
However the battle is far from over. German Chancellor Angela Merkel and French President Nicolas Sarkozy publicly endorsed a Financial Transaction Tax but only as long as it was applied all over the world. This amounted to little more than cynical posturing from this less than dynamic duo. As much as it would be desirable to have such a tax world-wide, both conservative leaders know the difficulty of such a task. In addition, the details of their version of an FTT show that they would generate a much smaller amount of revenue. Figures of 2-3 billion have been mentioned by German Finance Minister Schauble. This is dwarfed by the predicted revenue under our PES plan.
Until now the conservatives have managed to impose their strict vision on how to fight the crisis – cuts and more cuts. EU countries already weakened by the effects of the crisis have been forced to impose heavy austerity measures to balance their budgets when it has been proven time and time again that the way to re-boost the economy is investment and not blind cuts – just think about how the New Deal pulled the US out of the Great Depression in the 30’s – one has to wonder who is the ideologically obsessed.
As socialists, we say that budget consolidation should not be an excuse to dismantle the welfare state. A balanced budget should be attained by also increasing revenue. Implementing a FTT in Europe would bring €200 billion that could be used to partly cover public deficit (€800 billion expected in 2011) and to create hundreds of thousands of jobs.
A new direction is needed if we want to avoid an extra 4.5 million unemployed in Europe in the next three years. People should not have to endure the consequences of a faulty economic policy based on cuts and on a ‘balance sheet first’ ideology. Our way prioritizes public investment and ensures job creation. Our approach puts people first.
Civil society has already joined the PES in asking for an FTT to guarantee a fairer financial system. Our European Alliance brings together a diverse set of actors united in call for an FTT. Common actions are set to take place after the summer:
- on September 7th as European economy and finance ministers meet, our European Alliance PES, NGOs, Trade Unions and civic groups will get together and call on the European Finance Ministers to introduce an EU FTT;
- on September 29th the PES will join the European Trade Unions Confederation (ETUC) in a massive demonstration against the cuts imposed by the conservatives, the undermining of the welfare state and for balanced measures such as the FTT;
- the autumn 2010 will also see a coordinated action by PES Member Parties to adopt legislation for an FTT. The national parties will, where it is feasible, present a bill defending the implementation of a 0.05% tax on speculative financial transaction to their national parliaments.
The austerity-only approach as presented by conservatives is not the way to recovery. Instead, it dismantles the welfare state and keeps citizens as servants of the market.
On the other hand, the PES way out of the crisis focuses on people, on jobs and on taxing the ones responsible for the crisis. Our way puts the citizens first and fights for a market that can serve people.
It is time to restock our medicine cabinets with new public budget pills. It is time for that restock to be sponsored by those who emptied the cabinet in the first place.
We can work together towards a fairer Europe by putting into practice a tax on speculative transactions. This Autumn I look forward to sharing further updates, advances, and alliances on the road towards a European Union wide financial transaction tax.
