The resolution on innovative financing adopted by the European Parliament at the Plenary Session held on on 8 March 8 2011 supports that the European Union should promote the introduction of a tax on financial transactions, as this type of tax would improve the functioning of markets and reduce speculation. At the same Session, the Parliament also voted on a second resolution on tax and development aimed to reduce tax evasion and fraud to increase efficiency in aid delivered to developing countries.

These two resolutions adopted by the European Parliament at the Plenary Session held on 8 March, which include the Economic Affairs Committee resolution on innovative financing and the Development Committee resolution on tax and development, set out Parliament's ideas on how best to generate new revenues, reform tax governance and maximise revenue from traditional sources. Both resolutions highlight how certain types of behaviours and tax fraud need to be addressed in order to make markets more efficient and transparent.

MEPs considers that the adoption of a tax on financial transactions, a formula which was already supported by the Parliament back in March 2010, would improve the functioning of markets, by reducing speculation and helping to finance global public goods and reduce public deficits. Parliament also stressed that innovative financing instruments may offer a double benefit, as they would contribute to achieving important policy objectives such as stability and financial market transparency, while providing a significant revenue potential.

Innovative financing tools and Financial Transaction Tax (FTT) to combat fraud

Both resolutions call for the development of a low-rate financial transactions tax (FTT), stressing that innovative financing would help to revitalize the efforts made by Member States, the European Union and the international community to combat tax evasion and tax fraud, raising around 200 billion euro per year and discouraging speculative trading by making it more costly. MEPs also highlighted that the movement of purely speculative transactions to other jurisdictions would not only have few adverse effects, but it could help increase market efficiency.

Parliament also addressed in its tax and development resolution, the issue about tax fraud and other practices in the field of development aid, noting that such practices represent an annual loss of 800 billion euro in developing countries. The Parliament considers that developing countries would reduce their reliance on foreign aid, by putting in place viable tax systems. It is estimated that tackling this problem would retrieve a ten-fold figure up to development aid. The Parliament has also called for the Union and its Member States to give priority to the fight against tax havens and corruption, so that developing countries can increase their national incomes.

Furthermore, Parliament's tax and development resolution criticizes a European Commission paper on promoting good governance in tax matters for ignoring the fact that trade liberalisation, and in particular economic partnership agreements, substantially reduce the customs revenues of low-income countries. Finally, the resolution calls on EU governments to carefully consider the possibility of creating a global lottery to finance action against hunger, as proposed by the World Food Program.