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15th Apr 2024

Reports of Tobin Tax death exaggerated, EU says

  • Semeta: 'It is really premature to say what will be the final outcome' (Photo: consilium.europa.eu)

EU tax commissioner Algirdas Semeta has cast doubt on reports that his Financial Transactions Tax (FTT), also known as the Tobin Tax, is being unravelled by member states.

The Reuters news agency and the Wall Street Journal this week cited "senior EU officials" as saying some of the 11 countries set to take part are having second thoughts.

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Semeta's original proposal envisaged a 0.1 percent tax on share and bond trades and a 0.01 percent levy on derivatives trading from 1 January, designed to take €35 billion out of the pockets of banks and traders into national treasuries.

Some countries now want to have a tax on share trading only, the Wall Street Journal said.

Germany does not want to take decisions before national elections in September, while Austria and Belgium want to exempt pension funds from the bill, it added.

"If one thing is clear, it's that the financial transactions tax is not going to fly as far as originally hoped," another EU source told Reuters.

But for his part, Semeta told EUobserver on Friday (31 May) it is only natural that member states' officials aired gripes at the last FTT meeting on 22 May because it was just the second of its kind on what is a complex law.

"It is really premature to say what will be the final outcome of the situation because member states are currently in the phase of the first reading," he said.

"It's normal in the first reading that member states go through the proposal article by article and the commission explains what each provision means … I see these news reports as an attempt to create a sensation. They do not reflect what is currently going on in the [EU] Council," he added.

Under the EU's so called enhanced co-operation procedure, experts from the 16 non-FTT member states attend the meetings of the 11 pro-FTT countries but do not take part in decision making.

Semeta called this "the beauty of the community method."

Despite the UK's public contempt for the FTT, the commissioner indicated the British delegation is playing a positive role in the debate.

He said: "The talks are taking place in a constructive mood and there are various technical ideas on how to make it better … I do not see any kind of obstruction [by the Brits]."

Semeta's proposal says the money raised by the levy should flow back to the 11 countries' coffers.

But a parallel proposal by his colleagues in the commission's budgets department says part of it should go into the EU budget instead.

The EU tax chief noted that, when it comes to the EU budget idea, "some member states consider that all the revenues [from the FTT] should go into the national budgets."

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