CTT discussed in Rome amidst the political crisis

Hearing in the Italian Parliament, Committees on Foreign Affairs and on Finance, 21 April 2005, concerning a fact-finding investigation on forex transaction taxes.

Invited experts:

1. Lieven A. Denys, Professor of International and Tax Law, Free University of Brussels.

2. Glyn Ford, MEP (UK Labour), Chair of the Capital Tax, Fiscal System and Globalisation Intergroup in the European Parliament.

3. Heikki Patomäki, Research Director, NIGD, Network Institute for Global Democratisation, Professor of International Relations, University of Helsinki.

In the Italian Chamber of Deputies, a few MPS have introduced proposals for laws establishing a currency transaction tax (CTT). These proposals are yet to be specified in detail. An earlier hearing on 3 December 2004 with Professors Paul Bernd Spahn  and Jean-Pierre Landau and this one – that took place in Palazzo Montecitorio (the main Parliament building) in Rome – were meant to assist in outlining arguments for the CTT as well as in providing possibilities for formulating these proposals in more detail. Given the current political constellation, however, and the political crisis Italy was facing last week (following a weak performance in regional elections earlier in April, ministers from the centrist Union of Christian Democrats, or UDC, formally submitted their resignations from Silvio Berlusconi’s government), it looked rather unlikely that these proposals will lead to an immediate adoption of a CTT law in Italy.

At the time it was in fact unclear whether the Italian Parliament would continue to work or not. Facing a vote of no confidence in the Senate, Italian Prime Minister Silvio Berlusconi handed in his resignation to Italian President Carlo Ciampi on Tuesday 19 April after telling senators he planned to form a new government with different coalition partners. Despite these developments, the Committee on Finance wanted to conduct this CTT hearing anyway, not only because they thought it to be exceptionally interesting and important but also because it would have been difficult to reschedule the hearing any time before the summer, given the role of three foreign experts.

I started by presenting a “Menu of Choice for Good Reasons for the CTT" (a power-point presentation or the presentation as a PDF-file are available). Lieven Denys scrutinised the progress that has been made recently in various contexts and explained why the CTT is much easier to implement than the VAT (value-added-tax). Glyn Ford continued from this and argued that there has been a shift of opinion from “not possible” towards “perhaps possible but uncertain”. He also gave a rather reassuring picture of the developments both in the European Parliament and in the UK.

All three talks were given in English, with simultaneous translation into Italian (in fact, when President La Malfa and his secretary invited me, they offered the possibility of translating my talk from Finnish!). Those members of the Committee who were present seemed to listen very carefully. Unfortunately, there was only a little time for discussion since we went overtime by half an hour. However, Mr. Grandi, who chaired the session (the right-wing parties allow the opposition to chair sessions every now and then), put forward a series of insightful questions that led to long replies. All the presentations will be available in Italian at the Parliament’s website ( http://english.camera.it/).

The latest news is that there is now a “new” Berlusconi government. Today on Tuesday 26 April the “new” ministers will be presented in front of the Republic President for the formal installation. Nothing changed, it seems that Italy will have the same government until 2006 (elections)

Heikki Patomäki