Schaeuble Goes Global to Salvage Financial Transaction Taxby and
EU finance ministers discussed levy at meeting in Bratislava
Austria’s Schelling says decision on EU tax needed in October
After five years of fruitless talks on a European financial-transaction tax, frustrated policy makers including Germany’s Wolfgang Schaeuble are talking up the prospect of a global levy that would make sure banks pay their fair share.
If the plan sounds familiar, that’s because European Union leaders tried to sell it to their partners in the Group of 20 nations in 2011 and got shot down. Since then, Schaeuble and others have spent countless hours debating first a tax for the whole EU, then a scaled-down levy in 10 countries led by Germany and France.
Schaeuble returned to the idea of a global tax at a meeting of G-20 finance chiefs in July, acknowledging that efforts to hammer out a compromise in Europe were “hitting a wall.” With no breakthrough in sight, Schaeuble spoke hopefully on Sept. 10 of enlisting the Organization for Economic Cooperation and Development to push the issue forward.
“This may help us in Europe to resolve the dilemma of a good idea failing just because it won’t work unless our neighbors are doing the same thing,” Schaeuble told reporters in Bratislava after the tax was discussed at a meeting of EU finance ministers. “In the end this requires global regulation.”
An EU-wide levy was proposed in September 2011, as a “first tangible step for taxing such transactions at the global level,” according to the European Commission, the bloc’s executive arm. The initiative failed at the first hurdle, however. George Osborne, then the U.K. chancellor of the exchequer, conceded after meeting with his G-20 counterparts later that year that the “necessary international consensus” didn’t exist to implement such a tax globally.
The EU plan for a bloc-wide tax was itself abandoned by mid-2012. Some countries elected to carry on under “enhanced cooperation” rules that require consensus from at least nine states. Ten are still at the table: Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain.
Schaeuble said the OECD is “very receptive,” and the 10 enhanced-cooperation countries have agreed to ask the Paris-based organization to “intensify these efforts on a global scale.”
Austrian Finance Minister Hans Joerg Schelling, who’s leading the 10-nation talks, offered a different account of the meeting in Bratislava. Schelling said he had asked for OECD tax experts to “comment on our model” as he searches for a breakthrough before an October deadline he has set for decisive progress on the plan.
Schelling said the immediate priority is to wrap up the enhanced-cooperation talks. “If the OECD likes our model, we’re happy to make it available for free, but I’m not counting on it,” he said. “When I look at the G-20, I’m afraid that the U.S. and Japan probably wouldn’t be on board.”
Schaeuble offered little encouragement that a deal will be reached. “We once found 11” countries willing to participate in the talks, and “nine is the minimum number,” he said. “We’re no longer 11. Whether we’re still 10 is something we don’t know for sure.”