European Commission President Jose Manuel Barroso has proposed a tax on financial transactions that will help restore the public finances of EU countries, writes Financial Times.
Barroso said in a speech on “State of the Union” held in the European Parliament that countries using the euro have to move towards closer economic cooperation to protect the single currency and this could be achieved by changing the European Union treaties.
“We are at a crucial moment in history because if we do not go forward with a deeper unification, we will get more fragmented”, said Barroso. The crisis, he added, is a “baptism of fire” for his generation.
Barroso’s speech came at a time when fears of a possible entry in default of Greece continues to press on financial markets, while the country is caught up in negotiations with its creditors for the first tranche of €8 billion from the loan received last year.
Divisions regarding the tax on financial transactions in Europe continues. If France and Germany, the largest in the euro area, support it, United Kingdom, the place for the most important financial center in the European Union strongly opposes it.
Barroso gave no details about the tax, saying that it could be raised about €55 billion annually through it. However, an European Commission study indicated that the tax could reduce long-term growth with a value between 0.53% -1.76% of GDP.
European Commission President argued that the public sector participated with guarantees of €4,000 billion to support the banking sector during the crisis and that now is the time for the banks to pay back their debts.
“It is a matter of ethics,” said Barroso. “It is time for the financial sector to give something back to society”.