Brussels, 22/06/2012 (Agence Europe) - Better enhanced cooperation than nothing at all, said EU Taxation Commissioner Algirdas Semeta, expressing the disappointment encountered at the meeting of EU27 finance ministers, in Luxembourg on Friday 22 June, that a financial transaction tax (FTT) cannot be introduced at EU27 level any time soon. Given the state of play in Council of Ministers' discussions, however, it might prove possible to introduce a tax using the enhanced cooperation mechanism among at least nine member states, led by France and Germany. The exact form and details are a mystery at this stage, however, and the legal procedure for introducing such a tax is likely to be cumbersome and obstacle-laden. At the moment, ministers are at the brainstorming stage, but are at least talking about an idea favoured by public opinion and parliaments in countries like Germany, where such a tax is being discussed along with the ESM and the EFSF as part of a deal to which the chancellor wants parliament to agree. The Austrian finance minister explained that the question of ESM ratification is bound up with moving closer to the introduction of an FTT.
Since early March, technical work has shed light on the fact that it will not be possible to reach agreement at EU27 level on the draft legislation unveiled by the European Commission in November 2011, and the Danish Presidency is therefore considering a step-by-step approach, starting with the introduction of a stamp duty-type tax, which would only be levied on secondary market transactions for shares and bonds (not including gilts and sovereign debt) along possibly with unit trusts, but not derivatives. In the draft compromise, this is said to be an initial stage and the tax would gradually be extended to cover more products. The aim of Friday's meeting was to see whether there was a desire among the member states to proceed with this idea and whether a sufficient number of countries (at least nine) wanted to introduce an FTT under the enhanced cooperation mechanism.
The Austrian finance minister said Austria favoured the idea of enhanced cooperation and would take part in it, upon which the German finance minister immediately suggested each nation should say at the meeting whether he/she would back such an idea or at least not oppose it. Countries that would back the Danish Presidency's step-by-step approach include Germany, Austria, France, Italy (but Italy said it could not yet say whether it would go along with such an idea), Spain, Slovenia, Belgium (which wants the Commission's “territoriality” idea to be taken on board), Portugal, Greece, Hungary and Estonia. Finland may back the idea but wants to know how far enhanced cooperation would extend (which countries would be involved) before deciding. Poland said it might back the idea for countries wanting to intervene, wanting some of the income raised to feed the European Union's coffers.
As expected, the main objections were raised by the United Kingdom, which opposes the Commission's ideas because of how it would impact on the financial world and business in general. The British finance minister said that before agreeing to enhanced cooperation, he wanted details about exactly what the tax would entail, like what it would be levied on and how high it would be. What would be done with the revenue? The same issues were raised by Luxembourg's finance minister, who said that his country did not oppose the idea of enhanced cooperation but wants more details before deciding to join it. He said that legally speaking, an FTT introduced via enhanced cooperation must not impact negatively on the single market. This objection was also voiced by Sweden, which is very hostile to the initial idea (having already burned its fingers with such a tax at national level), which wants stamp duty instead as a way of ruling out the Commission's ideas. Ireland largely agrees with the British line, saying it would not oppose enhanced cooperation but wants to be consulted at each stage of the process as details of the tax emerge.
After the debate, a legal expert explained the stages required for enhanced cooperation. After it has been requested by at least nine nations and it is clear that the Council of Ministers cannot agree on the Commission's proposals, the Commission would need to ensure that all the institutional niceties have been respected. It would draw up a report on this for the Council of Ministers, which would decide whether or not to authorise qualified majority enhanced cooperation. If so, the Commission would be asked to draw up formal proposals, which would be voted upon by the countries involved. It is clear that this will take time. (FG/transl.fl)