Brussels, 09/09/2011 (Agence Europe) - France and Germany submitted their proposals to the European Commission on Friday 9 September on putting in place a financial transaction tax. They want this tax to be applied to all transactions involving at least one European party, with “as low a rate as possible”.
In a letter to Commissioners Michel Barnier (Internal Market and Financial Services) and Algirdas Šemeta (Taxation), the French and German finance ministers, François Baroin and Wolfgang Schäuble, set out their proposals for the tax. Last month Nicolas Sarkozy and Angela Merkel pushed for such a tax to be adopted at European level.
The tax will be levied on all financial and currency transactions, according to information released by the German Finance Ministry, when at least one party is based in the EU.
Several models have been spoken of with regard to its basis for application and the rate will be as low as possible to minimise the risk of operators conducting their transactions outside Europe to avoid paying the levy. A source close to the discussions spoke this week of a rate of 0.1% for shares and bonds and 0.01% for derivatives. Financial institutions, banks, stock exchanges and financial services providers will be responsible for collecting the tax from their clients and for payment.
The two ministers, in the hope still that Europe's lead will be followed across the globe, say that they are sure that a European tax on financial transactions will be a crucial step towards global consensus, without harming European competitiveness.
A number of grey areas remain, however. The French and German ministers admit in their letter that more work will have to be done on the exact definition of the territoriality criterion, and, in particular, the issue of groups (branches and subsidiaries). The same is true for the basis for calculation to be used for operations in derivatives, where a single contract may bring several transactions. In discussion, the merits of taxing certain non-speculative transactions would have to be evaluated, the ministers say. They stressed that any difficulties there might be in applying the tax must not be used as an excuse for rejecting it.
The Commission may bring forward its proposal as early as next month. French President Nicolas Sarkozy held talks with Commissioner Šemeta on Friday to discuss the outlines of the tax. “During the discussion, I recalled that the European Commission is finalising a legislative proposal for a financial transaction tax at EU level. We will come forward with a solid and concrete proposal in the next few weeks. I welcomed France's support in this respect and also strongly encouraged President Sarkozy to continue voicing his support during subsequent discussions in the Council”, Šemeta commented afterwards. (L.C./transl.rt)