Germany in favour of FTT?Peter WahlThe heads of the Christian Democrat and Liberal Parties in the GermanParliament have agreed to propose a "

Financial Market Tax

" on European andglobal level, in order to make the financial industry contribute to the burden of the crisis.

They use the term "f

inancial market tax

" as a general category whichcomprises both the

Financial Transaction Tax

(FTT) and the

Financial Action Tax

(FAT). The latter had been proposed by the IMF in his draftreport, presented in April.Both instruments are considered in the agreement as possible instrumentsto make the finance industry pay, without giving priority to one of them.Furthermore, the agreement considers the "Financial Market Tax" asadditional to the bank levy, which had already been agreed upon inprinciple by the German Government in March.The agreement is a great success and a big step forward for theproponents of the FTT, but is not yet the breakthrough: the FAT is still astrong competitor (and not a bad idea at all) and it is clear, that there has tobe a European agreement.It is unclear if

European

means, that the UK has to agree, which wouldmean that with the new British government it will be very difficult, or if it isthe Euro zone. In the latter case it would be possible to implement at leastthe FAT if not the FTT, because France, Austria and Belgium are in favour of the FTT.The German finance minister has - immediately after the agreement wasmade public - voiced scepticism, whether an agreement at European levelwould be possible.There is also a tactical element in the decision: the parliament has to decideon the 750 bn. safety net for the Euro. Given the dimension of the package,the government wants the Social Democratic Party, which is the biggestopposition party, to agree on the package. The Social Democrats had tiedtheir consent to an agreement on the FTT and they maintain this positionunder the present circumstances.The agreement between Liberals and Christian Democrats also includesthe prohibition of naked short selling and a European rating agency.