EU finance ministers have renewed their push to enact a financial transaction tax among the EU states, with some agreeing to a phased timetable for the introduction of the tax, and others expressing support for a new plan to widen the tax base, particularly with respect to derivative products.
In a statement released January 22, Austrian finance minister Hans Jörg Schelling said he reached agreement with German finance minister Wolfgang Schäuble on a new plan to introduce a stock-exchange tax on equities from 2016 and a tax on other transactions from 2017, with the exception of government bonds.
Schelling said he favored broadening the scope and lowering the rate of the financial transactions tax. “In particular, taxing derivatives only makes sense in the context of a broad assessment basis,” he said. Schelling added that further talks with Germany were planned this month.
In a separate joint letter to EU finance ministers, also released January 22, Schelling and French finance minister Michel Sapin said they agreed that negotiations on how to structure the tax should be “based on the assumption that the tax should have the widest possible base and low rates.”
France had previously insisted that some derivatives be exempt from the financial transactions tax, but in early January French President François Hollande announced a shift in position by stating during a radio address that the tax should cover “all financial products at a low rate.”
Meanwhile, banks are gearing up for a fight. On January 23, four trade associations — the European Association of Cooperative Banks, the European Association of Public Banks , the European Banking Federation, and the European Savings and Retail Banking Group — fired off a joint letter to EU finance ministers arguing that introduction of a financial transaction tax would “harm the internal market for financial services and distort competition among operators.”
Eleven EU nations are spearheading the move to enact a coordinated EU financial transaction tax, operating under EU rules that permit a subset of members to pursue voluntary agreements. Of the 11 nations, Austria, Belgium, Germany, Estonia, Greece, France, Italy, Portugal, and Spain pledged in to May 2014 to come up with “viable solutions” for the financial transactions tax by the end of 2014, but the nations remain unable to reach agreement on how to structure the tax.
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