Oct. 9 (Bloomberg) -- The European Commission has assembled 11 nations willing to move ahead with a financial-transaction tax and aims to draw up plans by November.
The Brussels-based commission will move “very quickly” to put together a proposal, Tax Commissioner Algirdas Semeta said at a press conference in Luxembourg today. The announcement gives new life to an initiative that has been on hold since it became clear earlier this year there would not be unanimous agreement among all 27 European Union countries.
Seven nations have formally committed to the tax and four more have pledged support. Semeta’s office can begin drawing up plans as soon as it receives two more formal letters, under “enhanced cooperation” procedures that require nine participants to move forward.
Spain, Italy, Estonia and Slovakia are the four nations that have pledged to back the process. France and Germany sent a letter to begin the process on Sept. 28, followed later by Austria, Belgium, Portugal, Slovenia and Greece.
Once Semeta’s office has drawn up an outline for the tax, it must be approved by a weighted majority of all 27 EU members to move forward. Then participating nations can argue details among themselves.
‘Degree of Uncertainty’
There’s “still a degree of uncertainty” about the upcoming transaction tax plan, U.K. Chancellor George Osborne said at today’s meeting.
Osborne, who has made clear that the country won’t be signing up to the initiative, called for an “economic assessment” of the plan, while saying that the U.K. didn’t want to stand in the way of countries that intend to take part.
A prior version of the proposal sought to tax a broad range of stocks, bonds and derivatives under a system that would apply to worldwide transactions for any bank based in the EU. The European Commission had estimated that plan would raise 57 billion euros ($74 billion) a year, according to estimates from Semeta’s office.
Technical studies predicted that proposal could have a small negative impact on economic growth and also recommended that certain types of trades, like primary bond market sales and repurchase agreements, be exempt. It’s not clear how broad a scope Semeta will seek for the smaller group of nations.
“There’s no proposal on the table yet,” Irish Finance Minister Michael Noonan told reporters in Luxembourg today. “All that’s announced is that they’re getting together to design a proposal.”
Noonan said Ireland would not participate or alter its existing stamp duty, which isn’t assessed on derivatives.
“We have 33,000 people working in financial services, the bulk of them in Dublin, and if we were to accept a financial-transaction tax and London didn’t, there would be a transfer of business from Dublin to London and a lot of the jobs would potentially be lost,” Noonan said.
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