Plans for an EU financial transaction tax (FTT) have been brought back into focus, after the breakaway group of 10 member states which have committed to introducing the levy indicated they will publish their plans by the end of the year.
The group, which comprises Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain, met at last week’s Eurogroup session. While discussion of the FTT was not on the official agenda for the meeting, reports put out subsequently indicate the project will still go ahead.
Pierre Moscovici, European commissioner for economic and financial affairs said: ‘We are designing something which is ambitious and realistic. Hopefully in the weeks to come we will be capable of submitting drafts... and adopt what could be the first European FTT.’
Wolfgang Schäuble, German finance minister, said: ‘We want to have a decision by year-end, a positive one, if possible.’
The 10-nation group wants the European Commission to present draft legislation before the end of the year, as well as undertaking further analysis on the potential impact of the tax, including on pension funds.
The latest proposal is being led by Austria, which wants a system of ‘harmonised taxation’ applying to transactions involving stocks issued in one of the participating countries to start with, and would then be extended to shares unless participating member states decided otherwise.
Plans for an EU-wide FTT were first proposed in 2011 and ran into substantial opposition from the UK and others. The proposal at that stage was to harmonise the tax base and set minimum rates for all transactions on financial markets, once at least one EU financial institution was involved in this transaction. The minimum tax rates proposed were 0.1% for the trading in shares and bonds, and 0.01% for derivative agreements such as options, futures, contracts for difference or interest rate swaps.
The European Commission was unable to secure agreement for an FTT which applied to all 29 member states. Subsequently, 10 countries went ahead with their own plans for the levy, operating under the EU’s ‘enhanced cooperation’ rules.
Originally the group expected the scheme to go live by 2014, but there have been numerous delays. While the group includes major Eurozone economic players such as France, Germany and Austria, its smaller participants such as Slovakia and Slovenia have expressed concerns about the possible impact of the tax for them.
European Commission estimates suggest the FTT could bring in €22bn per year.
