Schelling Says EU Needs December Decision on Transaction Tax

  • Italy, Slovenia and Estonia have strong concerns on tax plan
  • Schelling says proposal may be dropped if no deal by December

European Union nations need to decide by next month on whether a financial-transactions tax is possible among participating countries, Austrian Finance Minister Hans Joerg Schelling said.

Schelling, who leads the group of 11 nations that have signed up to design a joint FTT, said he’ll aim to submit a report in December to all 28 EU nations. So far, he said, talks among participating nations have yielded “clear progress” but also no deal.

“I suppose it’s necessary that we can have a solution” when EU finance ministers meet again on Dec. 8, he told reporters in Brussels on Tuesday. “If there is no solution then, one should discuss just as openly that no decision could be reached. At this stage we still believe a solution is possible.”

Italy continues to push for the tax to include sovereign debt derivatives, while most other nations have agreed to exclude those derivatives along with government bonds, Schelling said. Meanwhile, Slovenia and Estonia want the tax to have a broader cross-border reach to ensure it would raise sufficient revenue to be worthwhile, he said.

“There are two countries that have a different view on the territoriality -- here the question is whether one can or will only tax the shares of the 11 states that are part of this in-depth work, or also beyond that,” Schelling said. Slovenia and Estonia “are both very small countries with small financial markets” so their concerns make sense, he said.

Plans for a transaction tax already failed among all 28 EU nations, and the current talks are seeking a compromise among a smaller group that sought to press on under “enhanced cooperation” rules, which require consensus from at least nine nations. Work continues to try to reach an accord among those still participating, Schelling said.

“In general, everybody is committed to implement the project, but there are of course conditions to realize such a project,” Schelling said. “That’s why the technical side and the political decision can’t be separated. It might sound technical, but in reality it’s a political principled decision that has to be taken.”

The 11 participating nations met Monday night after a euro-area finance ministers’ meeting to discuss the state of play. Spanish Economy Minister Luis de Guindos told reporters after the meeting that advances have been made and that there was consensus that derivatives on government debt would not be included in the tax’s scope.

— With assistance by Esteban Duarte

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