Financial transaction tax
Eleven eurozone states commit to enhanced cooperation
By Tanguy Verhoosel | Tuesday 09 October 2012
The numbers add up: 11 EU states, all members of the eurozone, made a firm commitment, on 9 October, to launch enhanced cooperation on the financial transaction tax (FTT). Italy, Spain, Estonia and Slovakia were the last countries to put their cards on the table during the state-of-play discussion of the FTT by the 27 finance ministers, in Luxembourg. They joined the camp of France, Germany, Austria, Belgium, Portugal, Slovenia and Greece.
Taxation Commissioner Algirdas Semeta welcomed this outcome and urged Rome, Madrid, Tallinn and Bratislava to confirm their oral commitments in writing as soon as possible so that the procedure can continue. At least nine states must submit an official request for enhanced cooperation before the Commission can evaluate it and present a legislative proposal after getting the green light from the 27.
The Cyprus EU Presidency announced that the matter would be added to the agenda of the 13 November Ecofin Council. France and Germany would like to hammer out a political agreement before the end of 2012.
Doing so would be quite a feat given the many outstanding issues to be resolved, raised by the UK. While confirming that it would not participate (unlike Poland, which left the door open), the UK said it would not oppose the move.
What scope will be given to the FTT? Will the tax undermine the cohesion of the single market? How will revenues derived from the tax be allocated? There is also a more political question: to secure the support of Italy and Spain, have France and Germany promised something in return, in the context of the negotiations on the EU financial framework, for example?
Semeta shed a little light on his intentions, saying that all the requests he has received so far were based on his 2011 proposals.
At that time, the Commission proposed to levy a tax of 0.1% on transactions on shares and bonds, and 0.01% on derivatives. Part of the revenues from the FTT (€57 billion a year in the event that all 27 took part) should be allocated to the EU budget, it suggested, which would enable states to reduce their direct contributions.
Germany remains opposed in principle to allocating part of the revenues from the tax to funding the EU, while other countries have concerns about the potentially negative impact on their own financial market of an FTT covering a very broad range of financial products.
The idea of restricting, possibly temporarily, the scope of the tax to shares and bonds, based on the example of the British stamp duty, has been discussed in this context.