Financial transaction tax
Pioneer member states plan to act immediately
By Tanguy Verhoosel | Monday 25 June 2012
“You have to strike while the iron is hot,” summed up one diplomat. The European Commission is therefore likely to receive, by the end of June, a letter from the member states – between nine and twelve – that plan to launch enhanced cooperation on a financial transaction tax (FTT).
After a policy debate by the 27 finance ministers, on 22 June in Luxembourg, the Danish EU Presidency concluded that unanimous agreement was impossible on this subject but that a “significant number” of countries were willing to form a vanguard (see
Europolitics4450). Their number lies between nine and twelve, since certain states did not express a totally clear position: Austria, Germany, France, Belgium, Portugal, Slovenia, Greece, Spain and probably Italy (which nonetheless wants to include in the FTT a “larger package of short and longer-term measures” for economic growth), Poland, Slovakia and Estonia.
Given the stalemate in Ecofin, these states are set to take, before July, the second of the five steps involved in launching enhanced cooperation, according to a diplomatic source: sending a letter to the Commission detailing their plans. The third step will be for the Commission to check whether all the conditions laid down by the treaties (number of member states, last resort remedy, openness of the project to all countries, no risk of creating distortions in the single market and respect for the EU’s exclusive competences) are fulfilled and, if so, proposing to the Council to formally authorise enhanced cooperation. The Council must act by qualified majority once the project gets the green light from the European Parliament, which makes up the fourth step. In the fifth and last step, the Commission must present a legislative proposal in due form that must be adopted under co-decision.
The FTT by a limited number of states “will not happen overnight,” observed Danish Finance Minister Margrethe Vestager. The countries most vehemently opposed to the European FTT – the United Kingdom and Sweden in particular – have already set the tone: they will not oppose enhanced cooperation as a matter of principle, but will be very careful before giving the green light for implementation to make sure that they will not feel any “negative impact” and that everyone’s “rights, obligations and competences” are respected.
Although the outlines of the plans for enhanced cooperation are still vague – France and Spain have stressed the need for a “gradual approach” that may initially exclude derivatives, pension funds and possibly investment funds from the FTT – it is “urgent” to progress, warned Austrian Finance Minister Maria Fekter. Otherwise, the Austrian parliament “will not ratify” the treaty establishing the European Stability Mechanism (ESM, the eurozone’s permanent rescue fund). In Vienna, the ecologists in the opposition ranks will refuse to give their crucial support to the majority on the EMS if they are not first assured that the FTT has been put on track.
Germany is in a similar position. The Social Democrat opposition, which holds a majority in the Bundesrat (parliament’s upper chamber), wants the FTT to be launched in exchange for its support for ratification of EMS, in a vote slated for 29 June.
Considering these imperatives, public expectations and the risk of fragmentation of the single market that would result from implementation of disparate FTTs in the different states (France, for example, will introduce a tax on equities transactions in August), Taxation Commissioner Algirdas Semeta is resigned to “pave the way” to enhanced cooperation. “I regret that it was not possible to agree unanimously,” he commented, “but enhanced cooperation is better than drawing a total blank”.