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European Parliament reiterates support for financial transaction tax

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  • European Parliament reiterates support for financial transaction tax

EUROPE - The European Commission's controversial proposal for a financial transaction tax not only would reduce high-frequency trading, but could also actually boost euro-zone GDP, according to the European Parliament.

At an Economic and Monetary Affairs Committee hearing earlier this week, Parliament said MEPs had "reiterated" their support for the idea, although some conceded it needed "fine tuning".

Parliament said a number of experts at the hearing - including Avinash Persaud of Intelligence Capital, Sony Kapoor of Re-Define and Stephany Griffith-Jones of Colombia University - had all "strongly advocated" the proposed tax.

It said these experts had concluded that the overall impact of the tax could lead to a 0.25% increase in GDP and help to "stabilise the economy by curbing the practices most responsible for building up risk".

The Panhellenic Socialist Movement's Anni Podimata, who is currently preparing Parliament's official opinion on the matter, argued that the tax was an effective means of raising considerable funds in the "fairest possible way".

She also argued that it would "remove incentives" to enter into financial deals that generated "no value added besides profit for the traders carrying them out".

However, Markus Ferber, member of Germany's christian socialist CSU, warned that lawmakers must ensure that the cost of the tax was not simply "transferred down the line" to pension funds.

The Commission's tax proposal, first mooted last September, has come in for widespread criticism, particularly from the European pensions industry.

Earlier this week, the Dutch pensions regulator said the tax could cost the Netherlands alone more than €4bn a year, while the European Federation for Retirement Provision called for an exemption for pension funds.

Parliament is set to provide its draft opinion on the tax in March, with a committee vote tentatively scheduled for April and a plenary vote for May.

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