Parliament has been calling for a financial transaction tax (FTT), for close to two years and the Commission tabled a legislative proposal for one late in 2011. The latest Eurobarometer survey shows that 66% of Europeans favour such a tax.

Rapporteur Anni Podimata (S&D, EL) during the debate said, “The FTT is an integral part of an exit from crisis. It will bring a fairer distribution of the weight of the crisis. This FTT will not lead to relocation outside the EU because the cost of this is higher than paying the tax.”

The adopted text adds to the Commission proposal an “issuance principle”, whereby financial institutions located outside the EU would also be obliged to pay the FTT if they traded securities originally issued within the EU.

For example, Siemens shares, originally issued in Germany and traded between a Hong Kong institution and one in the US would have to pay the tax. Under the Commission’s proposals, such transactions would have escaped the tax, because only financial institutions based within the FTT zone would be subject to it.

The “residence principle” proposed by the Commission is also kept, which would mean that shares issued outside of the EU but subsequently traded by at least one institution established within the EU would be caught.

Various exemptions were requested by a number of MEPs. In the end the most substantive exemption was that granted to pension funds, which would see the tax waived on their transactions.

The opinion does not request that the revenues from an FTT be transferred to the EU budget. It does indicate that if the revenues are placed into the EU budget then this would reduce national contributions to the budget; The rapporteur says that such contributions could be reduced by up to 50%.

The opinion maintains the Commission proposal timetable: 31 December 2013 deadline for Member States to adopt implementing laws and 31 December 2014 for entry into force of these laws. The original proposal to exempt transactions made on the primary market (i.e. purchasing of securities from the issuer when such securities are first placed on the market) was maintained. This would ensure that investments of benefit to the real economy would not be taxed.

The opinion was approved with 487 votes in favour, 152 against and 46 abstentions.