Schaeuble, Schelling Say FTT Project Needs Three-Month Break

  • Some countries still have reservations, German minister says
  • Transaction-tax participants meet ahead of Brussels Eurogroup

German Finance Minister Wolfgang Schaeuble and his Austrian counterpart Hans Joerg Schelling said plans for a 10-nation financial-transactions tax will need three more months of talks, citing reservations among some participants with new governments.

“There are some concerns that now is not the right time,” Schaeuble said after meetings in Brussels ahead of a euro-area finance ministers’ gathering on Monday. He said “uncertainty in financial markets” is weighing on participating countries as they consider whether they can take part in the plan.

“The situation in some countries is somewhat unclear, that’s why we said today that we’re pretty much ready in substance, but we’re giving ourselves three months to clarify if all 10 states are backing it and if they can take such a decision,” said Schaeuble. At least nine countries must be on board for the tax plan to proceed under EU rules for “enhanced cooperation” when efforts among all 28 nations fail.

EU governments in December kicked the tax plan to mid-2016 as fresh worries erupted over the levy’s economic and political consequences. Estonia pulled out of the original 11-nation group, and Slovenia raised questions about whether the tax, as proposed, would raise enough revenue to make it worthwhile for smaller countries.

Revenue assessment

Austria’s Schelling, who leads the group of FTT nations, said the plan must be scrutinized for its effects on the real economy when the euro region moves from an era of low interest rates to a phase of higher borrowing costs. Such a change could have implications especially for countries where pension funds play a big role, he said.

The European Commission and a technical working group will reassess how much revenue the levy on financial transactions could raise, depending on what kinds of assets would be made part of the tax base, Schelling said, citing the example of derivatives. 

The Austrian minister said earlier that there has to be enough revenue to make the efforts worthwhile. Nations have in the past considered schemes to pool revenues to make sure no participating country bears a financial penalty, without reaching any consensus on how to proceed.

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