A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Taxing financial transactions (FTT) to provide
the European Union with budgetary resources

October 24, 2016

It was thought that the controversial issue of a tax on financial transactions had been swept under the rug. Yet, the lines are shifting in Brussels and in Paris.

On October 20 and in the framework of the 2017 Finance Draft Law, representatives of the French National Assembly decided to extend the scope of the financial transaction tax (FTT) to the most speculative operations–– the intra-day trading––and to raise its rate to 0.3% from 0.2%. As a reminder, the French FTT adopted in March 2012 is applied to a nation’s default credit swap1, but does not concern agricultural commodities.

The extension of the FTT voted should lift revenues to €2 to €4 billion that will be allocated to Official Development Assistance (ODA) and to the French Development Agency (FDA)2. The FTT will now be applied to back and forth operations during a single trading session. As a result, high-frequency trading, which automatically and swiftly forwards orders to financial markets thanks to automated algorithms, are now also concerned. According to the European Securities and Markets Authority (ESMA), such high-frequency trading is far from negligible, and accounts for between 21% and 45% of volumes of equity traded on the Paris Stock Exchange3.

In Europe, a new step has also been taken on October 10, 2016. Ten European Finance Ministers4 did commit to reach a final agreement on the provisions of the future FTT for the European Union by the end of 2016. The technical blueprint has already been drafted, while the political component will be discussed at the December 6 meeting. As it cuts down financial market hyper-volatility, the European FTT could yield up to €22 billion every year5.

Among the reasons for such policy advances on an issue that has been discussed since 2011, we note the project to provide the European Union with a genuine system for its own resources. In fact, the European budget has, up to now, been mostly based on the annual contributions from each of the member states, a situation that strains many European policy debates on the burden of the too infamous “return on the budget”. Accordingly, and outside all concepts of European general good, constant references are made such as: Will this policy allow a given member state to “recover” more funds in proportion to its share of the EU budget?

Alain Lamassoure, MEP and representative of the EPP Group in the High-Level Group on Own Resources (HLGOR)6 at the European Commission, deplores that “the current system to finance the European budget is opaque, undemocratic, anti-European, ineffective and unfair since the poorer countries pay relatively more than the rich nations”7. The MEP feels that the current funding of the European budget sanctifies the “political shortsightedness”, at a time when it is urgent “to break away from funding the European Union through tips!”8. In the same way, Jean Arthuis, MEP in the ALDE Group and President of the Committee on Budgets at the European Parliament, states that “parliaments have been established in all modern democracies to levy taxes. Yet, the European Parliament does not enact taxes. It is somewhat hemiplegic: It rules on expenditures but not on incomes”9.

Would the European FTT be an opening to redefine the European budget funding system, and to break from the current bean counters’ calculations that are quite far from European ideals? We could hope it, but if the Brexit takes away the British veto possibility regarding such a measure, it also takes away the City’s potential contributors.

Momagri feels that the FTT extension and the debate on the Union’s own resources should lead to the integration of commodities in the FTT base, and lead to the improvement of European Union expenditures. Often focused on position limits, the debate on the tools required to cut the excessive volatility and increasingly financialized of agricultural commodities is now enhanced with the prospect of taxing day-trading operations. In our proposal for “A New Strategic Course for the CAP” outlined in our White Paper10, we are even advocating the implementation of a “financial solidarity tax” on financial transactions in case of excessive price hikes compared to physical market fundamentals. Added to the basic FTT, it would raise the tax rate to introduce more organization in times of speculative boom.

1 http://www.impots.gouv.fr/portal/dgi/public/popup?espId=2&typePage=cpr02&docOid=documentstandard_6497
2 Oxfam France

3 http://www.assemblee-nationale.fr/14/amendements/4061A/AN/675.asp
4 France, Germany, Spain, Austria, Belgium, que, Slovenia, Portugal, Italy, Greece and Slovakia.
5 ONE-Oxfam

6 The High-Level Group on Own Resources (HLGOR) was created in February 2014 and conducts research to find more transparent, simple, fair and democratically responsible funding means for the EU

7 http://www.alainlamassoure.eu/(...)financement-du-budget-europeen-est-opaque-non-democratique-(...)-2015/
8 http://www.alainlamassoure.eu/2016/10/video-sortir-du-financement-de-lunion-europeenne-par-des-pourboires/
9 https://www.euractiv.fr/section/euro-finances/opinion/budget-de-lue-revision-dans-la-resignation/
10 Momagri’s White Paper can be downloaded from our website

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Paris, 24 June 2019