Steinbrück calls for global financial transaction tax at G20

German Finance Minister Peer Steinbrück called Friday for a global tax on financial transactions as the Group of 20 developed and developing economies met in Pittsburgh.

Steinbrück calls for global financial transaction tax at G20
Photo: DPA

Among the necessary responses to the financial crisis was burden sharing that included “a global financial-transaction tax” of around 0.05 percent, Steinbrück wrote in a column for the Financial Times newspaper.

He warned that people worldwide were aware of hundreds of billions of euros and dollars in public aid to banks followed by bonus payments in the financial sector that “now go hand in glove with massive job losses in the real economy.

“Financial market participants need to show they understand their role in causing the crisis and that they are willing significantly to contribute to preventing its recurrence,” the German minister wrote.

He argued that the application of such a tax by all G20 and European Union members could raise up to $690 billion (€470 billion) per year, or roughly 1.4 percent of global gross domestic product (GDP).

Those countries account for about 97 percent of all exchange-traded equities and about 94 percent of exchange-traded bonds, Steinbrück said, meaning it would be hard to avoid paying the tax “if the G20 stood united.”

A draft text from the G20 summit said leaders would agree that bankers’ bonuses should be linked to long-term profits but the idea of a global tax on financial transactions has met stiff resistence in the past.

Several European leaders have nonetheless floated the concept again as the G20 seeks to map a way out of the global crisis.

The tax “would be just, would do no harm and would do a lot of good,” Steinbrück argued, adding: “If there is a better idea for fair burden-sharing, let’s hear it.”

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Germany and France extend Covid tax breaks for cross-border workers

Germany and France have agreed to extend the relaxation of tax rules for cross-border workers until the end of the year.

Cross-border workers commute by car but they can for now continue to work at home
Cross-border workers usually have to commute but can for now continue to work at home.. Photo: Fabrice Coffrini / AFP

The agreements between France and the governments of Belgium, Luxembourg, Germany, Switzerland and Italy avoids double taxation issues for anyone travelling across the French border to or from those countries in order to work.

During the pandemic, tax rules were eased to allow French cross-border employees, like their counterparts in Belgium, Luxembourg, Germany, Switzerland and Italy, to work from home without having to change their tax status.

The deals, which were established at the beginning of the health crisis in March 2020, were due to end on September 30th – and would have plunged cross-border workers still working from home because of the health crisis into renewed uncertainty over their taxes.

The latest extension of these agreements means there’s no confusion over where a cross-border worker pays their taxes until December 31st – for example cross-border workers who work in Geneva but live in France, who normally pay their taxes and social security contributions in Switzerland. 

Under normal circumstances, anyone living in France who works in Switzerland can spend no more than 25 percent of their time working from home. If they exceed this time limit, they would have to pay these tax charges tin France rather than in Switzerland, which would be much higher.

The agreements between France and Belgium, Luxembourg, Germany and Switzerland “provide that days worked at home because of the recommendations and health instructions related to the Covid-19 pandemic may … be considered as days worked in the state where [workers] usually carry out their activity and therefore remain taxable,” according to the statement from the French Employment Ministry.

In the case of Luxembourg, days worked from home because of the health crisis are not counted in usual the 29 day limit.