Germany in favour of FTT?

Peter Wahl

The heads of the Christian Democrat and Liberal Parties in the German
Parliament have agreed to propose a "Financial Market Tax" on European and
global level, in order to make the financial industry contribute to the burden of the crisis.

They use the term "financial market tax" as a general category which
comprises both the Financial Transaction Tax (FTT) and the Financial
Action Tax (FAT). The latter had been proposed by the IMF in his draft
report, presented in April.

Both instruments are considered in the agreement as possible instruments

to make the finance industry pay, without giving priority to one of them.

Furthermore, the agreement considers the "Financial Market Tax" as

additional to the bank levy, which had already been agreed upon in
principle by the German Government in March.

The agreement is a great success and a big step forward for the
proponents of the FTT, but is not yet the breakthrough: the FAT is still a
strong competitor (and not a bad idea at all) and it is clear, that there has to
be a European agreement.
It is unclear if European means, that the UK has to agree, which would
mean that with the new British government it will be very difficult, or if it is
the Euro zone. In the latter case it would be possible to implement at least
the 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 was
made public - voiced scepticism, whether an agreement at European level
would be possible.

There is also a tactical element in the decision: the parliament has to decide
on the 750 bn. safety net for the Euro. Given the dimension of the package,
the government wants the Social Democratic Party, which is the biggest
opposition party, to agree on the package. The Social Democrats had tied
their consent to an agreement on the FTT and they maintain this position
under the present circumstances.

The agreement between Liberals and Christian Democrats also includes

the prohibition of naked short selling and a European rating agency.
As background, the following elements are important:
a. the German elites are deeply shocked by the crisis of the Greek and the
Euro;
b. the safety package for the Euro is unpopular;
c. there are strong fears in the society stemming from the public debt and
the question who will pay the bill;
d. in the elections ten days ago in the biggest Federal State (North Rhine-
Westphalia) the Christian Democrats and the Liberals had dramatic losses
and lost the majority in the second chamber (the chamber of the 15 Federal
States).

German civil society had developed strong pressure recently. Among

others, an official hearing by the finance commission of the parliament had
been obtained by a petition.

The hearing took place yesterday. The Alliance for the FTT and several of
its member organisations, such as Attac, Tax Justice Network, WEED and
Trade Unions had been heard as experts.

On Thursday some street activities will play take place in the framework of
the international week of action for the FTT.

Peter Wahl
WEED - Weltwirtschaft, Ökologie & Entwicklung
Eldenaer Str. 60, 10247 Berlin
Tel: +49-(0)30-2758 2616