Faymann tests tax on financial transactions’ potential

Austria is investigating how much money it could generate by a tax on financial transactions, according to Chancellor Werner Faymann.

The chairman of the Austrian Social Democratic Party (SPÖ) told radio station Ö1 this morning (Tues) a team of experts were examining the issue for the government coalition of his party and the People’s Party (ÖVP).

Faymann welcomed the decision of French President Nicolas Sarkozy. The conservative politician said in a TV speech on Sunday he would set up such a tax in his country in August. This would make France the first European Union (EU) member to charge financial market companies for their engagements.

Sarkozy said his government wanted to heave a tax of 0.1 per cent on the acquisition and sale of various financial market products. Globalism critics and anti-capitalism groups praised the step as a “crucial symbolic act” but also criticised the decision to make some exceptions. Dealing with derivates and other controversial high-risk products will not be affected, according to Sarkozy who is expected to run for another term in office later this year.

Faymann explained today: “Cooperation among all Eurozone members about a tax on financial transactions is desirable but our neighbouring countries should be on board at least. We are trying to find out how much revenue could be generated by charging financial transactions.”

The German opposition unanimously appreciated Sarkozy’s step and appealed to Chancellor Angela Merkel of the Christian Democratic Union (CDU) to follow France’s example. The German Free Democrats (FDP), who cooperate with the CDU, are strictly against introducing a tax on financial transactions in Germany. Now all eyes are on Merkel who could try to seek alliances with other parties concerning the issue considering the poor performance of the FDP in recent public opinion polls.

Faymann – who met with Merkel near Berlin last week to discuss the EU’s future anti-crisis strategy – has been calling for a tax on financial transactions for some time. The chancellor identified Austria’s new bank solidarity tax as another reasonable crisis time measure. The charge is, in contrast to a tax on financial transactions, already in effect.

The finance ministry raked in around 500 million Euros thanks to the new levy last year. Bankers hit out at the coalition for agreeing to the measure – and made clear that finance institutes would not hesitate to pass any additional costs on to their customers.

All of Austria’s established parties support the idea of a tax on financial transactions. However, there is disagreement as far as its volume is regarded. A recent poll by Oekonsult shows that 89.1 per cent of Austrians want such a tax to come into effect.

Faymann attended yesterday’s summit of EU state and government leaders in Brussels, Belgium, yesterday. The EU-27 agreed on investing 82 billion Euros into anti-youth unemployment programmes this and next year. Especially countries where over three in 10 young residents are out of work should benefit from the projects.

Just four per cent of Austrians have no job, according to statistics. No other EU member is doing better in fighting unemployment at the moment. Figures also show that the alpine country’s youth jobless rate is around twice as high. Spain has the highest unemployment rate in the EU at around 20 per cent. The struggling country’s youth unemployment rate is more than twice as high.