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BackOn 13 March, the EU Finance Ministers discussed their positions on the EU Financial Transaction Tax. The result is sobering: it comes as no surprise that the opponents of an EU-wide tax on shares, bonds and derivatives - led by Great Britain and Sweden - are still refusing to agree to the plan. Apart from clarifying still unresolved issues concerning the Commission proposal, the Finance Ministers now want to look for alternatives. The danger is that the search for a compromise will produce a watered down “Mini Tax”.
The supporters of the transaction tax increased the pressure in advance to the Council Meeting of the Finance Ministers. In a letter to the Danish Presidency, the Finance Ministers of nine Member States - among them Germany, France and Austria - requested to accelerate the consultations on the Financial Transaction Tax. The signatories would like the process to be finalised by mid-year. Hence, the German Ministry of Finance is set on drawing up its own proposal for a Financial Transaction Tax, which is supposed to be “simpler and more practicable” than the Commission proposal.
The German Minister of Finance Wolfgang Schäuble warned at the Council Meeting of the Finance Ministers that the argument, a tax on financial transactions had to be introduced globally might result in nothing happening at all. However, this would bear the risk of damaging the European democracy model. After all, the EU had to demonstrate that it had learned something from the financial crisis. Should the EU fail to find unanimous support for a solution, one had to look for alternatives, said Schäuble. The French Finance Minister François Baroin was also in favour of drawing up an alternative proposal on the Commission text, which would find broader approval by the Member States. Austria’s Finance Minister Maria Fekter also supported the Commission proposal, took, however, a pragmatic approach with regard to alternative proposals. If a compromise was found, it might also be acceptable for those countries that currently already have a stock exchange tax.
The fronts remain hardened; the meeting of the Finance Ministers did not bring any clear results
It was no big surprise that the United Kingdom, Sweden and the Czech Republic were opposed to an EU Financial Transaction Tax. Malta’s Finance Minister Tonio Fenech also warned that the tax would only punish the economy and consumers. Luxembourg, whose government until now had not made its position clear, showed its colours by taking the side of the financial lobbyists. The Luxembourg Finance Minister Luc Frieden explained that he would oppose the tax because he worried about the competitiveness of the European financial industry. He also asked the question whether implementing such a tax within the EU would be sensible, given the fact that neither the USA nor China had introduced it.
A clear picture looks different. Whilst the consultations in respect of the EU Financial Transaction Tax remain on the agenda of the current Danish Presidency, even those Member States that support the Commission proposal appear to have lost hope of finding a “great solution”. In any case, whatever is behind the indicated alternative proposals should be viewed with a critical eye. The danger is that the Finance Ministers suggest a slimmed down “light” version, which has little in common with the original plans of a broad tax on all shares, bonds and derivatives. However, such a version would neither reduce damaging high frequency trading, nor would it ensure the urgently needed stabilisation of the financial markets. The aim of AK, ÖGB and its European Allies remains to use a comprehensive EU-wide tax on financial transactions to make those foot the bill that had caused the crisis.
The German Minister of Finance Wolfgang Schäuble warned at the Council Meeting of the Finance Ministers that the argument, a tax on financial transactions had to be introduced globally might result in nothing happening at all. However, this would bear the risk of damaging the European democracy model. After all, the EU had to demonstrate that it had learned something from the financial crisis. Should the EU fail to find unanimous support for a solution, one had to look for alternatives, said Schäuble. The French Finance Minister François Baroin was also in favour of drawing up an alternative proposal on the Commission text, which would find broader approval by the Member States. Austria’s Finance Minister Maria Fekter also supported the Commission proposal, took, however, a pragmatic approach with regard to alternative proposals. If a compromise was found, it might also be acceptable for those countries that currently already have a stock exchange tax.
The fronts remain hardened; the meeting of the Finance Ministers did not bring any clear results
It was no big surprise that the United Kingdom, Sweden and the Czech Republic were opposed to an EU Financial Transaction Tax. Malta’s Finance Minister Tonio Fenech also warned that the tax would only punish the economy and consumers. Luxembourg, whose government until now had not made its position clear, showed its colours by taking the side of the financial lobbyists. The Luxembourg Finance Minister Luc Frieden explained that he would oppose the tax because he worried about the competitiveness of the European financial industry. He also asked the question whether implementing such a tax within the EU would be sensible, given the fact that neither the USA nor China had introduced it.
A clear picture looks different. Whilst the consultations in respect of the EU Financial Transaction Tax remain on the agenda of the current Danish Presidency, even those Member States that support the Commission proposal appear to have lost hope of finding a “great solution”. In any case, whatever is behind the indicated alternative proposals should be viewed with a critical eye. The danger is that the Finance Ministers suggest a slimmed down “light” version, which has little in common with the original plans of a broad tax on all shares, bonds and derivatives. However, such a version would neither reduce damaging high frequency trading, nor would it ensure the urgently needed stabilisation of the financial markets. The aim of AK, ÖGB and its European Allies remains to use a comprehensive EU-wide tax on financial transactions to make those foot the bill that had caused the crisis.