EU Ministers Seek More Study of Financial-Transaction Tax
European Union finance ministers remain divided on a financial-transaction tax, with France, one of the main backers of the levy, saying it will allow more time to reach an accord.
The ministers did not reach any decisions during debate in Brussels today. They called for more study how much tax banks pay and pledged to reconsider the issue later this year, along with possible alternatives to the EU’s existing proposal.
“We hope for an accord that’s as broad as possible, and we will take the time necessary to find as large an accord as necessary, which is what’s wanted by the citizens of Europe,” French Finance Minister Francois Baroin said as he arrived at the meeting. France in the past has pressed for speedier passage by a smaller group of nations if no broader coalition emerges.
The European Commission, the EU’s regulatory arm, has proposed a wide-ranging tax on trading of stocks, bonds, derivatives and other financial contracts. The commission says the tax could raise 57 billion euros ($75 billion) annually if implemented throughout the region, while also discouraging transactions like high-frequency trading that it considers more risky for the financial system.
German Finance Minister Wolfgang Schaeuble said the EU should continue to strive for agreement among all 27 member countries. At the same time, he said ministers should not back away from the topic in the absence of global or EU-wide consensus.
“I hope we will get it,” he said during a public debate. “‘If not, I think we are obliged to concentrate on looking for alternatives. The outcome of nothing would be disastrous.’’
The U.K., Sweden, Luxembourg and Malta are among the tax’s skeptics, and these nations today reiterated their longstanding positions.
The U.K.’s position is ‘‘unchanged,” although it concurs that banks should pay their “fair share” of regulatory costs, said U.K. Treasury Minister Mark Hoban, standing in for Chancellor of the Exchequer George Osborne. Hoban said it’s not clear that banks would pay more overall tax if a broad levy were included, since banks might find offsetting gains from other parts of the tax code.
The Brussels-based commission and Denmark, current holder of the EU’s rotating presidency, have urged more technical work to find a widely accepted compromise. Tax Commissioner Algirdas Semeta said today the EU is working on further analysis that it aims to bring out before a working-group meeting in April.
Sweden’s Finance Minister Anders Borg said a tax was a bad idea while European countries are seeking to boost growth and cut debt. “A financial-transaction tax would be difficult to accept,” he said. “It would increase household lending costs, it would increase the cost for companies and it would increase the cost for government, so it is a proposal that is not good for European growth.”
The U.K., which already has a so-called stamp tax, has said it will oppose any new transaction tax that doesn’t come with backing from the Group of 20 major nations. Luxembourg’s Finance Minister Luc Frieden said a tax is impossible without Britain, home to Europe’s largest financial sector.
“Without the U.K. there will be no transaction tax,” Frieden said on his way into the meeting. “I think the principle of the tax is OK, but that all 27 states have to participate.” During the public debate, he said the EU should reconsider its geographic approach for applying a transaction tax and should also consider the tax’s impact on jobs and the overall economy.
Dutch Finance Minister Jan Kees de Jager said an EU-wide financial-transaction tax would cause a “very big shift” in trading location.
Nine officials, including Schaeuble, Italian Prime Minister Mario Monti and Baroin, have sent a joint letter to the Danish EU presidency calling for faster talks to introduce the tax.
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