Brussels, 13/03/2012 (Agence Europe) - Meeting together on Tuesday 13 March, the EU27 finance ministers held their second debate about the draft financial transaction tax (FTT), based on a progress report after an initial technical study of the draft legislation. The ministers were asked to express their views on how work should continue over the next few months ahead of a more organised debate at the end of June. The Danish Presidency listed the areas to be agreed upon, mostly concerning what the tax would be levied on, its rate, to whom it would apply, how it would impact on the real economy, the danger of companies simply moving transactions to outside the EU and the directive's impact on non-EU financial bodies. EU Taxation Commissioner Algirdas Semeta said further technical research was required on how the tax would affect the economy before any policy discussions were held, which could easily lead to paralysis at this stage in proceedings.
German Finance Minister Wolfgang Schäuble summarised the general feeling of countries backing the tax when he said that talks must reach a positive outcome because failure to decide would be disastrous after so many years of talks on a Tobin Tax, a matter close to the heart of public opinion. . However, if EU27 agreement was not possible, then he said alternative options should be examined, like enhanced cooperation or other forms of taxation. He asked for work over the next few months to focus on two issues - whether a tax solely in the EU would be effective to prevent tax evasion and if so, how much it would cost the economy. The Commission could carry out a more detailed impact assessment and look at potential alternatives, as suggested by the Danish Presidency, in order to have firm foundations on which to build a do-able compromise, preferably among all 27 member states.
This view was fully backed by the French minister, François Baroin, who said it was important to go as far as possible and have the greatest possible impact. He wants the Commission and the Danish Presidency over the next few months to pilot alternatives with a view to reaching a compromise. He said that other taxation issues remained to be settled, like OTC derivatives, a vast market for which no feasible solutions have yet been found and where agreement needs to be reached with countries opposing the tax. Italy's Prime Minister Mario Monti recommended a pragmatic approach and called for a more detailed impact assessment on the cost of the tax for businesses and the public sector.
The main opposition to the FTT idea came, as expected, from the United Kingdom and Sweden, but Luxembourg and the Netherlands expressed strong doubts. British Secretary of State Mark Hoban pointed out that the UK already taxes banks and levies stamp duty on share deals and urged other countries to follow suit rather than introducing a European tax that could damage the City of London's competitiveness. Swedish Finance Minister Anders Borg said that the tax could increase the cost of borrowing for households and businesses and recommended a detailed impact study and the search for alternatives. He added that Swedish public opinion would be hostile to the idea of a tax that feeds into the EU coffers. Luxembourg's Finance Minister Luc Frieden asked whether it was wise to apply an FTT in the EU alone or in a smaller geographical area for that matter, wondering how it might impact on the competitiveness of the European financial industry. The Netherlands said that the tax could be damaging in the long-run, not generating enough income to cover the cost of levying it. The Dutch also called for alternatives to be studied. The implementation cost question for small countries and the question of penalising the financial sector were raised by Malta, another country that is hostile to the idea. Austria favours the tax, but asked for alternatives to be examined, such as a type of VAT that would be better for countries opposing the Tobin Tax as such. (FG/transl.fl)