The euro area’s 17 governments should consider introducing their own tax on financial transactions if no agreement is possible at the European Union level, two of the region’s finance ministers said.
The EU is split over the merits of a transactions tax, which French President Nicolas Sarkozy and German Chancellor Angela Merkel favor to curb speculation on the markets and repair public finances. The U.K., an EU member outside the euro area, has said such a tax would have to be applied across the Group of 20 nations to be effective and that it will oppose a unilateral EU measure. U.S. Treasury Secretary Timothy F. Geithner yesterday reiterated his opposition to a global tax.
“If it’s impossible at the worldwide level, we need to organize that in the European Union and at least in the euro zone,” Belgian Finance Minister Didier Reynders said after meeting his EU counterparts today in Wroclaw, Poland. Such a tax would be set at a lower rate than one applied globally, he said.
“A tax on financial transactions should at least apply to the whole euro zone,” said Elena Salgado, Spain’s finance minister.
The European Commission, the 27-nation EU’s executive arm in Brussels, said in August it will present proposals for an EU financial-transactions tax, reversing an earlier position that such a measure would be unworkable without global support. It said it will unveil its plans in early October.
Along with the U.K., the Dutch and Swedish governments have distanced themselves from the measure, which banks have warned would jeopardize economic growth and distort markets.
“The union is very divided on this,” Polish Finance Minister Jacek Rostowski said after today’s meeting. “There is no consensus.”
His comments were echoed by Michel Barnier, the EU’s financial-services commissioner, who added that the introduction of a “broad-based” tax would be “technically simple, economically manageable for the financial-services sector, productive for finances and politically fair.” Europe’s citizens are calling on the banking industry to make a fair contribution to society, Barnier said.
Before its announcement in August, the commission said it preferred the introduction of a so-called financial-activities tax at EU level. Such a levy would target lenders’ balance sheets or the lower borrowing rates they obtained compared with other businesses, it said.
“There is a consensus between the major countries of the euro zone on a tax on financial transactions,” Salgado said. “Spain supports it.” The plan will “be taken” by the region to a meeting of G-20 finance ministers next week, she said.