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 reached no decisions during debate in Brussels today. They called for more study of 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 have a two-track approach,” Danish Economy Minister Margrethe Vestager said in an interview after the meeting. She said the plan was to explore the EU proposal, see what countries already have in place and investigate other options like a financial-activity tax. “Denmark has that already and we’re quite happy with it,” she said.
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.
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.
Semeta said the commission wants to stick to the basic framework of the current proposal, which specifically targets transactions rather than other ways to assess the financial sector. Speaking to reporters after the meeting, he said an activities tax also does not have widespread support and is not under discussion for the moment.
Today’s meeting postponed any move toward action by a smaller group of countries, as permitted by EU rules under some circumstances. France in the past had pressed for speedier passage by a group of interested nations if no broader coalition emerged.
“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 before the talks.
German Finance Minister Wolfgang Schaeuble said the EU should continue to strive for agreement among all 27 EU 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. “‘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. They reiterated their longstanding positions today.
The U.K.’s stance 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 they might find offsetting gains from other parts of the tax code.
Sweden’s Finance Minister Anders Borg said a tax was a bad idea while European countries are seeking to boost growth and cut debt. He predicted it would hurt growth and increase borrowing costs for companies, households and governments.
“I don’t believe in a financial transaction tax,” Borg said in an interview. “There is a growing realization that it will be politically very, very difficult to get a financial-transaction tax through. And therefore I think some of the euro countries are now looking for something that could have a broader support, and one alternative could obviously be a financial-activity tax.”
The U.K., which already has a so-called stamp tax, has said it will oppose any new levy 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.