Monday

26th Feb 2024

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.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

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

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.

Opinion

After two years of war, time to hit Putin's LNG exports

Two years of tragedies, with well over 100,000 Russian war crimes now registered, underscore the urgent need to stop international LNG investments in Russia that continue to fund Vladimir Putin's war chest.

Latest News

  1. Angry farmers block Brussels again, urge fix to 'unfair' prices
  2. Luxembourg denies blind spot on Nato security vetting
  3. Record rate-profits sees EU banks give shareholders €120bn
  4. Why the EU silence on why Orban's €10bn was unblocked?
  5. Far-right MEPs least disciplined in following party line
  6. More farmers, Ukraine aid, Yulia Navalnaya in focus This WEEK
  7. EU rewards Tusk's Poland on rule of law with €137bn
  8. UK-EU relations defrosting ahead of near-certain Labour win

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us