Global Policy Forum

Germany's SPD woos left with tax on financial deals


By Hans Busemann

September 11, 2009

Germany's Social Democrats (SPD) have unveiled plans to push for a global tax on financial market transactions, in an apparent attempt to win over left-leaning voters weeks before election polls suggest they will lose.

In a paper by SPD chancellor candidate Frank-Walter Steinmeier and Finance Minister Peer Steinbrueck, the party outlines steps to make banks bear some of the costs of the economic crisis.

Polls show the SPD trailing Chancellor Angela Merkel's conservatives, with whom they have shared power since 2005, by 11-14 points before the Sept. 27 vote [ID:nLB273308].

The paper proposes a global tax on financial transactions -- or at the very least a national stock market trading tax -- to fight the effects of excessive manager bonuses and lost government revenues from tax havens.

"The best way to get the whole financial sector to participate in the costs of the crisis is through an international financial transaction tax," the paper reads.

It is entitled "This is what Sept. 27 is all about: Draw lessons from the crisis! Distribute the burden of the crisis fairly"

The idea laid out in the paper is similar to the Tobin tax, which usually refers to a tax on currency transactions and has been floated by people in various European countries over the years.

The paper said the SPD would push the idea with the Group of 20 nations and made clear that the tax rate would be kept low, at between 0.01 percent and 0.05 percent, which could yield revenues of up to some 1 percent of the global gross domestic product.

A G20 leaders summit in Pittsburgh later this month will discuss how to establish a safer financial system.

The SPD, which is trying to mobilize its traditional supporters and stop them voting for the far-left Left party, also put forward ideas to tax managers' allowances and payoffs and to continue the fight against tax havens.

Although the SPD has already outlined plans for a national stock market trading tax, backing a wider tax on financial transactions is a new approach for the party.

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