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Last week I talked to you about the fact that inequalities are on the rise in the EU and in the world. But I did not tell you anything about what can be done about it. Recognition by organisations such as the World Economic Forum that inequality of incomes is a high global risk alas seemed to be already a kind of achievement…

Now let’s talk about what we are ready to do about it. As Social Platform, we are not beating around the bush: one of our six strategic objectives for the coming years is to “eliminate all forms of socio-economic inequalities” nothing less, nothing more. Since this is quite a task, this year we will look at tax justice with the aim of having a joint position in the social sector that “requests the EU to set up appropriate mechanisms to reduce income inequalities in Europe”. And we are not alone. The issue of taxation is included in the trade union demands and it is part of the work of development organisations.

This is what we are doing, what are the EU and the member states doing on the issue of taxation? Well the Greek Presidency of the EU “will work actively on important tax issues” and will present their work programme today to Finance Ministers. The first thing with taxation is to know what we are taxing, right? Are we taxing capital, wages, the industry for environmental damages, etc.? As a first step, the December European Council called “for further progress at the global and EU levels in the fight against tax fraud and evasion”. The Greek Presidency has decided to start with a concrete step: to get the adoption of the revised directive on the taxation of savings by next March.

Here is the issue though: where are the savings in Europe? What is their amount? Some member states are going to fight hard to ensure that they can maintain their bank secrecy. If everything remains secret, how can you know the amount of savings? How do you tax a secret saving?

There is a second initiative on the table to tax profits made in the stock exchange markets called the financial transaction tax (FTT). The objective is to have an extremely small tax rate of 0.1% for the trading in shares and bonds, and 0.01% for derivative agreements such as options, futures, contracts for difference or interest rate swaps. In a nutshell, to ensure that the financial sector contributes to public finances.

How are the member states performing on this second initiative? First, they are not all on board – only 11 have agreed to enhanced cooperation on the issue. Second, these 11 member states have been discussing for a year the commission’s proposal and still have dozens of technical questions. I hope that these technical questions are there to improve the proposal and not to get an inoperative empty shell.

This is said, the problem is we cannot wait for responses to growing inequalities. Their consequences might be long term and without a cure, and as the WEF said, they nourish social unrest and political instability.

We know that action is needed to reduce inequalities and we are working with our friends to come up with concrete proposals. We know one thing – that it will be about tax justice.

Let’s engage

Pierre Baussand – Director