European Union nations that want a financial-transaction tax remain deadlocked on what trades they should include, as the clock runs down before next month’s European Parliament elections.
The 11 participating countries remain divided on whether to tax all derivatives, only equity derivatives or no derivatives at all, EU documents show. Finance ministers from Germany, France, Italy and Spain, as well as the U.K., which has opted out of the tax, meet in Paris today.
Proponents of the FTT, led by France and Germany, are trying to reach an agreement before the election in a bid to woo voters. The governments are now debating a phased approach that could target a wider range of trades in future years.
“The very big risk is for countries to say OK, we will tax derivatives, but with no strict time line. This would be an empty promise” Alexandre Naulot, policy adviser for Oxfam France, said in a telephone interview. “The FTT has to be used to tax the richest people to give to the poorest.”
EU nations should move ahead with the tax and use the funds to combat climate change and help the developing world, Naulot said. He called on nations to adopt a more specific time line so that countries will collect the tax instead of just talking about it.
Tax proponents say officials could tap data collected by financial regulators to make sure that banks and other companies are paying as proposed, while opponents warn that the tax could damage financial markets without raising much money.
The nations pushing for the levy are also split over who should get to collect it -- a trading firm’s country of origin or in the nation where trading takes place. On May 6, finance ministers from all 28 EU countries will hear a progress report on transaction-tax proposals.
“I do believe that, with the right will, the 11 member states can converge toward agreement on a common FTT,” EU Tax Commissioner Algirdas Semeta said April 25, in an e-mailed response to questions from Bloomberg. “We are ready to back any compromise that the 11 reach on the FTT, so long as it doesn’t create distortions or enable tax avoidance.”
The 11 participating countries agree with the commission on the tax’s goal, yet they haven’t found common ground on how to move forward. The document setting out the state of play, dated April 14, found that more technical work will be needed.
“A possible way forward would be to continue working on the progressive implementation of the tax,” said one of the documents, prepared by Greece in its role holding the EU’s rotating presidency. That effort “could focus on the taxation of shares and derivatives.”
Germany, France, Spain, Italy, Belgium, Austria, Portugal, Greece, Estonia, Slovakia and Slovenia have signed on to the transaction-tax effort.