U.K. Objects to Transaction-Tax Plan as EU Talks Head Into 2016

Estonia pulled out of a proposed European financial-transaction tax and the U.K. raised objections as talks among euro-area nations on imposing the levy stumbled into 2016.

Estonia couldn’t accept an outline deal and has concerns with unresolved issues, Finance Minister Sven Sester said during a public debate at a meeting of the European Union minsters in Brussels on Tuesday. Technical talks among the remaining 10 countries involved in the discussions will continue next year, Austria’s Hans-Joerg Schelling told reporters.

“This is a fresh start,” Schelling said. “We’ve made a significant, maybe a decisive step. Hard work lies ahead.”

U.K. Chancellor of the Exchequer George Osborne questioned a proposal for structuring the taxes that emerged from two days of talks in Brussels, saying the plan is “very uncertain as to what you’re setting forth” and its scope potentially illegal.

“For example, this would mean that a U.K. financial institution entering a derivative contract with a German bank would have to pay your tax,” he said at the public forum. “And this not only breaches the EU treaties it also breaches the international law. So I think we’re all going to have to see quite a lot more detail on what you’re actually proposing here.”

Without a global agreement in place, “we’ve got to make sure that this transaction tax does not impact on” countries that don’t want to take part, Osborne said.

Backers of the tax say it’s needed to raise revenue and limit risky market speculation, though details of the plan, including how to handle derivatives and exemptions for sovereign debt, remain in dispute. The countries still involved in the talks are Austria, Belgium, Germany, Greece, Spain, France, Italy, Portugal, Slovenia and Slovakia.

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