Schaeuble and Baroin Seek ‘Broad Base’ for EU Transactions Tax
The European Union’s planned tax on financial transactions should have a “broad base” covering equities, bonds, currencies and derivatives to ensure it can’t be evaded, the finance ministers of France and Germany said.
The levy should be imposed when at least one party to a trade is located in the EU, with territorial coverage in the region to be “as broad as legally permissible,” Germany’s Wolfgang Schaeuble and France’s Francois Baroin said in a joint letter to the European Commission published today.
“We believe the European Union should lead the global mobilization on this issue,” the ministers said in the letter, addressed to Michel Barnier, the EU’s financial services commissioner, and Algirdas Semeta, the taxation commissioner. Implementation of an EU tax “would be a crucial step on the path to reaching a global consensus,” they said.
The commission, the 27-nation EU’s executive arm, last month said it will draw up proposals for a transaction tax before a summit of world leaders in November, backing calls by French President Nicolas Sarkozy and German Chancellor Angela Merkel for the levy.
The region’s lenders have criticized the plans, warning that such a measure will harm economic recovery.
“The financial-services industry should not be seen as an additional source of tax revenue, but as an essential part of a stable and sustainable economy,” the Association for Financial Markets in Europe, which represents companies including Deutsche Bank AG (DBK) and BNP Paribas (BNP) SA, said last month in response to the commission’s announcement. A “tax would be a brake on economic growth.”
Discussions among nations on how the money raised by the tax should be spent shouldn’t delay progress in setting it up, the ministers said.
“A low tax rate should be considered in order to minimize the risk of distortions and circumvention,” they said. The final decision on the rate will depend on the tax base agreed by the EU, they said.
To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net
To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.
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