Saturday

22nd Jul 2017

Nine EU countries form splinter group on financial tax

  • Financial services are lobbying strongly against the so-called Tobin tax (Photo: Travel Aficionado)

A group of nine euro-countries led by France and Germany on Tuesday (7 February) asked the Danish EU presidency to fast-track plans for a financial transactions tax - a move indicating they will forge ahead on their own in the absence of an EU-wide consensus.

"We strongly believe in the need for a financial transactions tax implemented at European level as a crucial instrument to secure a fair contribution from the financial sector to the costs of the financial crisis and to better regulate European financial markets," the letter says.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The nine signatories are the finance ministers of France, Germany, Austria, Belgium, Finland, Greece, Spain, Portugal and the Prime Minister of Italy, Mario Monti, who also holds the finance portfolio.

They group asks the Danish presidency "to accelerate the analysis and negotiation process" of a proposal by the EU commission to introduce a 0.1 percent tax on stocks and 0.01 percent on trading in derivatives - the larger and riskier financial market held widely responsible for the 2008 financial crisis.

For its part, the Danish EU presidency "welcomes" the letter and is "currently looking into how to accommodate the request" at the technical level - meaning a new political discussion among finance ministers - it said in an emailed statement to press.

Britain and a handful of other countries fiercely oppose the tax arguing that it will lead to business flight and job losses in their financial sectors, making an EU-wide tax highly unlikely.

But the letter signals it could be introduced among fewer countries, with a minimum of nine member states needed to trigger so-called 'enhanced cooperation' - a group of like-minded member states pushing forward on legislation to be joined by others at a later stage.

Member states already used the legal option for the EU patent, which was gradually subscribed to by all member states except Spain.

Economists in favour of the financial transactions tax say the gradual approach will work. "Even national introduction is a positive step. The financial sector played a major role in the 2008 crisis, but it still remains one of the most under-taxed parts of the economy, for instance they pay no VAT," Stephany Griffith-Jones from Colombia University told an EU parliament hearing on Monday.

The British argument that investors will flee once the tax is introduced is incorrect, said Avinash Persaud, a London-based investment consultant, since the government already levies a stamp duty - unilaterally introduced in 1986 - on stocks traded in the City,

"Forty percent of this levy is paid by foreign residents. So far from sending them abroad, this stamp duty is paid by more foreigners than any other tax," he pointed out.

For its part, the EU Commission estimates that over €50 billion could be raised within the bloc if such a tax was introduced.

"The question we should ask is what is the least growth-unfriendly way of raising €50 billion in Europe. It is a financial transactions tax, not raising the VAT or increasing employment taxes," said Sony Kapoor from Re-Define, a think tank.

Opinion

Financial transactions tax: No surrogates, please

Watering down the financial transactions tax to a stock tax with many loopholes doesn’t do the job of curing an ailing system and raising sufficient money to tackle poverty and climate change, writes Bernd Nilles.

EU countries as divided as ever on finance tax

Member states remain thoroughly divided on the merits of a financial transactions tax. A small group forging ahead with the plan is not an automatic process either.

Opinion

Greece needs a new plan

Two years into its third bailout, Greece needs to combine the necessary fiscal targets with a new vision. This can be done in the context of the ongoing industrial revolution.

Opinion

Ceta and pesticides: A citizens' rights issue

The trade agreement with Canada will begin to apply on 21 September. But there is still a potential conflict on the right to data protection vs. the right to access information.

News in Brief

  1. Polish parliament adopts controversial justice reform
  2. GMO opt-out plan unlikely to go anywhere in 2017
  3. Slovak PM threatens to boycott inferior food
  4. France takes Google's 'right to be forgotten' to EU court
  5. Turkey accuses German companies of supporting terror
  6. Israel's Netanyahu caught calling EU 'crazy'
  7. UK does not collect enough data to expel EU nationals
  8. Polish president threatens to veto justice reform

Stakeholders' Highlights

  1. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  2. ACCAAnnounces Belt & Road Research at Shanghai Conference
  3. ECPAFood waste in the field can double without crop protection. #WithOrWithout #pesticides
  4. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  5. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey
  6. Martens CentreWeeding out Fake News: An Approach to Social Media Regulation
  7. European Jewish CongressEJC Concerned by Normalisation of Antisemitic Tropes in Hungary
  8. Counter BalanceOut for Summer Episode 1: How the EIB Sweeps a Development Fiasco Under the Rug
  9. CESICESI to Participate in Sectoral Social Dialogue Committee on Postal Services
  10. ILGA-EuropeMalta Keeps on Rocking: Marriage Equality on Its Way
  11. European Friends of ArmeniaEuFoA Director and MEPs Comment on the Recent Conflict Escalation in Nagorno-Karabakh
  12. EU2017EEEstonian Presidency Kicks off Youth Programme With Coding Summer School

Latest News

  1. Dutch coalition talks lengthiest in 40 years
  2. Polish parliament steps up showdown with EU
  3. EU urges UK to clarify its Brexit positions
  4. Law expert: direct EU powers have become too complicated
  5. Winter is here for Spitzenkandidat, but he'll survive
  6. Mafia money pollutes the EU economy
  7. Central Europe should be wary of Brexit stopping
  8. Poland's 'July coup' and what it means for the judiciary