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13th Jul 2020

Danish minister says financial tax would cost jobs

  • Denmark does not support the financial transactions tax, says minister Margrethe Vestager (Photo: Valentina Pop)

Denmark has come out against the creation of an EU financial transactions tax, saying it would hamper growth and cost "hundreds of thousands of jobs."

The country's economy minister Margrethe Vestager - who, as part of the Danish EU presidency, currently chairs the regular meetings of EU finance ministers (Ecofin) - told press in Copenhagen on Tuesday (10 January): "We would be very reluctant in promoting something that minimises growth and slashes jobs, particularly now during the crisis."

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She noted that despite France's public pledges to fast-track the tax, no EU country has formally asked to speed up procedure.

"It is in the normal legislative machinery at the moment, the proposal was first put on the table at Ecofin a few weeks ago and all attitudes were present around the table."

She added that the tax proposal is "not very robust" because even the European Commission, which backs the levy, has estimated it would cost the EU 1.7 percent in lost GDP and "hundreds of thousands of jobs" due to financial companies relocating outside the Union.

Using more colourful language, Denmark's former foreign minister Lene Espersen - currently a Conservative member of the parliament's EU affairs committee - said in a separate briefing the same day the tax idea is "bullshit."

"Why don't they [pro-tax advocates] start with the Cayman Islands and then come and talk to us? What we need is economic growth," she quipped, in reference to the British overseas territory and tax haven.

French leader Nicolas Sarkozy has made the tax a pet project of his in the run-up to presidential elections in March. He has even promised to impose the new levy unilaterally in France if other EU countries do not follow suit despite protests from Paris' financial sector.

Britain, Sweden and Malta, like Denmark, openly oppose the project.

German Chancellor Angela Merkel has given Sarkozy support for the idea, but acknowledged her coalition is split on the issue. She is facing growing opposition from her junior coalition partner, the Free Democratic Party (FDP), which says it goes against the pro-business coalition pact.

"Coalition agreements can only be changed together and not by one side alone," Hermann Otto Solms, an FDP finance expert, told Handelsblatt on Tuesday.

For his part, Frank Scheffler, another FDP member dealing with financial matters, issued an ultimatum. "I clearly warn the chancellor against going further in this direction. She is bound to keep to the relevant agreements, otherwise we as the FDP will no longer have to keep to the arrangements,” he told the Neue Osnabruecker Zeitung.

Merkel after meeting with Sarkozy on Monday declined to say if Germany would follow a French-only tax with a German national levy, saying only: "Personally, I'm in favor of thinking about such a tax in the eurozone."

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A six-point plan drafted by France and Germany suggests corporate tax 'co-ordination', an EU financial transactions tax and the re-deployment of EU funds in troubled countries as ways to spur growth and jobs.

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