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Sándor Richter richter@wiiw.ac.at

Searching new ways for financing the EU budget - on the proposal of a European tax on foreign exchange. Sándor Richter richter@wiiw.ac.at. Ökosoziales Forum Europa 21. Jänner 2008. Why to introduce an EU tax?. The current system and the ‘fair return‘ attitude

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Sándor Richter richter@wiiw.ac.at

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  1. Searching new ways for financing the EU budget - on the proposal of a European tax on foreign exchange Sándor Richter richter@wiiw.ac.at Ökosoziales Forum Europa 21. Jänner 2008

  2. Why to introduce an EU tax? • The current system and the ‘fair return‘ attitude • From a Union of member states towards a Union of citizens and firms • EU is provider of public goods, EU beneficiaries (citizens and firms) should pay directly for them • Mismatch: increasing redistributive power at EU level but no own resources at EU level

  3. What taxes are proposed? • Income taxes • Taxes on real economy transactions • Taxes on financial transactions

  4. How to decide? The criteria 1 Creating a Union of the citizens Financial autonomy Visibility, transparency and simplicity Allocation of resources along EU policies (externalities) 2 Budgetary aspects Sufficiency Stability Cost–effectiveness 3 Equity (fair sharing of the burdens) Horizontal equity Vertical equity Fair contribution across member states

  5. Foreign exchange transactions: main indicators Average daily global value of foreign exchange transactions (April 2004) $ 1 880 billion Annual value of foreign exchange transactions (2004) $ 460 000 billion of which: Global annual exports of goods and services$ 11 069 billion (2.4%) Global annual FDI outflows $ 730 billion (0. 2%)

  6. Geographical distribution of reported foreign exchange market turnover, 2004share in %

  7. Estimations for the revenues from a foreign exchange tax Estimations for the European Union: France MF $ 22 billion Spahn $ 17- 21 billion Belgium MF $ 9 – 39 billion Jetin $ 47 billion

  8. Foreign exchange transaction tax revenue estimates for 2004 USD billion

  9. Open questions to be answered • Revenues from tax on foreign exchange transactions for the EU or for the Third World? • Foreign exchange tax at global or European level - how to avoid relocation? • The UK´s role and the free riders - fair contribution of burdens? • Are there no more suitable candidates for a European tax?

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