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Political Economy



Opposition party, the Social Democrats will experiment on the financial transaction tax

Wednesday, 13 March 2013
The Swedish Social Democrats party is willing to experiment with the financial transaction tax being soon implemented Europe wide, to see if it is something could stabilise the economy and discipline the financial sector to avoid future economic uncertainty.

Otherwise known as the called Tobin Tax, the party's interest to be open to the possibility of introducing a tax on financial transactions, something the Swedish finance minister, Anders Borg is not keen to talk about

"I always think that one should have an open approach and try. Now if more countries go forward with this, I think we should follow it and see if it's something that works well," says Magdalena Andersson, (pictured below) Social Democrat economic spokes person to radio Sweden.

"But we also see that there might be problems with it, except that it produces other instruments, there is a risk that the transaction trade may moves elsewhere. Then you might not have won so much."

Eleven EU countries are to introduce a tax on financial transactions, such as banks or finance companies moving money between countries and deal in currencies.

The Social Democrats and Magdalena Andersson have clearly been reluctant to adhere to the tax. However, before the party congress in April, party executive writes, "it is necessary to develop tools that increase the stability of the international financial system and discourage short-term speculation."

Therefore, they feel that they should open for a transaction tax as a way to avoid financial problems that would pulls down the entire economy.

But the party leadership says that while a tax on financial activities by banks and finance companies, a higher employment national insurance contribution, may be a better option when companies are exempt from paying high VAT and too little in corporation taxes.

This would avoid the risk that the trade moves to other destinations, according to Magdalena Andersson.
"It's a tax that does not have some of the negative effects that a financial transaction tax has."

The tax is has not been welcomes by the Minister for Finance, Anders Borg He had said that the financial transaction tax in itself is bad for growth, bad for households, is bad for business and bad for Europe's growth, according to him.

For the Social Democrats, it is important to be able to look at both the positive and the negative sides, according to their economic spokesperson, Magdalena Andersson.
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