EU Financial-Transaction Tax Said to Hit Roadblock Over PensionsAlexander Weber and Nikos Chrysoloras
Belgium, Slovakia concerned over impact on pension funds
Finance ministers meet on Feb. 21 in Brussels to discuss tax
The 10 European Union countries exploring a financial-transaction tax are struggling to agree on key parts of the plan, casting new doubt on the future of the project, two people familiar with the talks said.
A task force working on possible exemptions for pension funds has so far failed to come up with a solution that satisfies all nations involved, the people said, asking not to be identified because the negotiations are private. Finance ministers plan to meet on Feb. 21 in Brussels to seek a way forward.
The impasse comes as the U.K.’s decision to leave the EU raises concerns that plans for a financial-transaction tax might deter banks seeking to relocate from London. Officially, finance ministers remain committed to the tax, partly due to coalition agreements that give them little scope to pull out.
The European Commission, the EU’s executive arm, proposed the tax in 2011 to make sure the industry made a “fair contribution” after taxpayers bore the costs of the financial crisis. When some member states said they didn’t want the levy, a smaller group sought a compromise under “enhanced cooperation” rules, which require consensus from at least nine countries. Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table.
Estonia abandoned the project in 2015. The threat that more countries will give up, leaving the group without the necessary support, has been present amid concerns by smaller nations that the tax won’t raise enough revenue to justify the effort.
In October, the group declared that more work needed to be done to analyze the impact of the tax on pension funds. Belgium and Slovakia want pension funds to be exempt from the levy, the people said.
A general opt out for pension funds from the tax would have to be extended to insurance companies, as these funds aren’t public entities in some of the participating countries, one of the people said. Exempting insurance from the levy would mean that the revenue raised is too small to justify it, and give the insurance sector undue advantage over the rest of the financial industry, one of the persons involved in the discussions said.