EU needs transaction tax for refugee plan, UN official says

The European Union should levy a tax on financial transactions to fund a “Marshall Plan” to deal with the continent’s worst refugee crisis since World War II, United Nations Under-Secretary-General Philippe Douste-Blazy said.

The bloc could raise 59 billion euros ($66 billion) a year with a 0.1 percent tax on trades of stocks and bonds and a 0.01 percent tax on the trades of derivative contracts, Douste-Blazy said in a phone interview from Hungary on Friday.

“It’s very important that the 28 countries of the EU agree on this financial tax, which is tiny, microscopic,” said Douste-Blazy, a former French foreign minister. Without adequate funding, the EU faces a “dangerous rise in racism and xenophobia.”

EU leaders clashed over how to deal with the influx of migrants at a summit in Brussels on Wednesday, after bruising negotiations on sheltering a fraction of the 1 million refugees that the Organization for Economic Cooperation and Development forecasts will arrive in Europe this year alone. Heads of government pledged 1 billion euros at the summit for UN refugee- relief efforts and the World Food Program.

Douste-Blazy’s proposal calls for channeling 25 percent of revenue from the transaction tax to financial and technical assistance to countries receiving refugees; 50 percent to developing countries to help them alleviate extreme poverty; and 25 percent to EU national budgets. Half of the migrants coming to Europe are fleeing poverty, not war, which will get worse as the gap between rich and poor widens, he said.

‘Only Solution’

“This mechanism of innovative financing is the only solution making it possible to receive political refugees with dignity and integrate them into our societies, in conformity with European values and in conformity with international law to which all European countries have subscribed,” Douste-Blazy said.

Douste-Blazy, who’s a special adviser on development financing to UN Secretary-General Ban Ki-Moon, has put forward similar tax proposals before. In February, four African countries including the Republic of Congo signed up to a “microtax” on oil, gold and uranium output to finance the battle against chronic malnutrition.

In 2012, France instituted taxes worth fractions of a percent of the value of bond, share and derivative trades, with 30 percent of the proceeds going to development. Eleven EU members, including France and Germany, are working on plans for a common transaction tax. Others including the U.K. have refused to sign up to the proposals.

[Bloomberg]