EU Transaction Tax Debate Highlights Euro-Area Disagreement

Bank tax proposals exposed broad disagreement among European Union policy makers today, during the first public debate over EU plans to draw revenue from banks and other financial firms.

Finance ministers from Germany, Austria and Belgium said the 17-nation euro area might need to move ahead on introducing a financial-transaction tax on its own unless resistance from the U.K. and other nations outside the currency union can be overcome. At the same time, euro members Italy, Luxembourg and Ireland said they may oppose the tax without other countries participating.

The European Commission has proposed an EU-wide plan that it says would raise 57 billion euros ($79 billion) a year. Today’s meeting of finance and economy ministers in Brussels was the first debate over the proposal since it was released in September.

Irish Finance Minister Michael Noonan said EU finance chiefs reached no decision on the proposed tax today and will return to the issue in the first half of 2012.

German Finance Minister Wolfgang Schaeuble said a financial-transaction tax may only happen if some countries are willing to make the first move.

“One day we may have to do it in the euro zone rather than the EU,” Schaeuble said. Non-euro countries should think “very carefully” about the consequences of creating differences between the single-currency area and the rest of the EU.

‘Good Evolution’

During today’s debates, nations including France, Germany, Spain, Belgium and Finland spoke in favor of the current EU proposal. Belgian Finance Minister Didier Reynders said that officials should press ahead with a transaction tax involving as many countries as possible.

“We need this morning to make progress on the taxation of financial transactions,” Reynders said before today’s meeting. “If it’s possible in the European Union it will be a good evolution. If it’s not, we will maybe do the same in the euro zone only.”

Nations that oppose the proposal include the U.K., Sweden, the Czech Republic and Bulgaria. U.K. Swedish Finance Minister Anders Borg told reporters today that the tax was a “non-starter” that would harm economic growth. U.K. Chancellor of the Exchequer George Osborne urged the EU to “put the issue to bed,” saying there was “nothing close to unanimity.”

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