Correspondent's Choice

This interview with Jeffrey Sachs about a proposed banking tax was published by EurActiv on 10th March 2010.

The EU should impose a financial transactions tax (FTT) as soon as possible, with or without the US, economist Jeffrey Sachs told EurActiv in an interview. Faced with huge budget deficits and public anger, both the US and the EU will have to impose the tax soon, predicted the American economist.

Sachs has joined a London-based campaign for an EU tax on banks, heaping criticism on the US for ignoring the public good.

The economist encouraged the EU to draw up a plan on a financial sector tax at the next meeting of EU finance ministers on 16 March, even though the US is not on board yet.

Sachs told EurActiv that an overwhelming public mood in favour of a tax on banks will push governments to legislate soon and that the EU should impose a “broad-based” tax at a “modest rate”.

“We have a huge budget hole in the US and in Europe and I think there is plenty of evidence that the financial sector is under-taxed and under-regulated,” Sachs argued.

Both the UK and the US have been waiting for an IMF paper, due in April, and are weighing up the costs and benefits of the tax before they come to a decision.

Currently the US and the UK have different views on which instruments and banks should be taxed.

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