Tuesday

24th Apr 2018

Group-of-11 gets go ahead for financial transaction tax

  • Commission - FTT could raise €57bn each year (Photo: stefan)

A European tax on financial transactions has moved a step closer to reality after EU finance ministers gave the go-ahead for 11 countries to put it into law.

Ministers at the Ecofin meeting in Brussels on Tuesday (22 January) formally gave consent for the group, marking only the third time the EU's voting procedure has been used to allow a group of countries to press ahead with a special project, joining divorce law and the recently established European patent court.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  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.

A minimum of nine countries is needed to request the so-called enhanced co-operation procedure.

The European Commission initially proposed an EU-level FTT for all 27 member states in 2011, but the idea was withdrawn after a number of countries led by the UK, Sweden and the Netherlands, refused to back it.

However, the 11 FTT countries - Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia - wrote to the commission in autumn 2011, urging the EU executive to re-submit its original proposal to them.

In an impact assessment on the levy, the commission estimated the group-of-11 FTT could raise €57 billion per year which could be deducted from national contributions to the EU budget.

In practice, national ministers are expected to insist that they keep control of all revenues.

The tax is expected to be set at a rate of 0.1 percent of bond sales and 0.01 percent on financial derivatives, many of which are bought and sold through high frequency trading based on algorithms.

Supporters claim that the tax will ensure that financial institutions pay their bit towards the costs of the economic crisis.

Critics say the financial sector will simply increase customer costs to offset the payments they have to make, and pointed to the commission's own assessment the FTT could result in a 1 percent reduction in EU GDP, roughly equivalent to €50 billion.

EU taxation commissioner Algirdas Semeta described the step as a "milestone for EU tax policy" on Tuesday, adding that "a block representing around two-thirds of EU GDP will implement this fair tax together, answering the long-time calls of their citizens."

The European Parliament, which adopted its own opinion on the FTT, also supports the proposal.

Greek centre-left MEP Anni Podimata, who drafted parliament's position on the tax, said that it would "discourage the most speculative and risky transactions."

French MEP Jean-Paul Gauzes, who speaks for the centre-right EPP group on the economic affairs committee, added that "it is major importance that the financial sector contributes, as any other economic sector, to the collective effort to grow out of the crisis."

For her part, Green group spokesperson Emilie Turunen called on the FTT to include an "issuance principle," whereby financial institutions located outside of the participating states would also be obliged to pay the FTT if they traded securities originally issued within the EU, arguing that this could make it "a truly European financial transaction tax."

However, the current proposal stipulates that the tax would be paid according to the "residence principle," meaning that it would be levied in the country where the financial institution making the trade is based rather than where the transaction was carried out.

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.

Focus

Greenland votes with eye on independence

Six out of seven political parties running in Greenland's parliamentary elections on Tuesday are pro-independence, but they disagree on how fast the last ties to Copenhagen should be cut. Increasing dependence on China could be the consequence.

News in Brief

  1. Far-right attack migrants on Greek island
  2. Merkel defends accepting UN refugees
  3. EU commissioner plans Malta 'money laundering' inspection
  4. Survey: Half of high polluting farms receive CAP subsidies
  5. Commission will 'not shy away' from Malta killing repercussions
  6. EU Commission opens probe on Alitalia state loan
  7. Paris suspect given 20-year sentence for Brussels shoot-out
  8. Merkel and Pena Nieto praise EU-Mexico trade agreement

Stakeholders' Highlights

  1. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  2. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  3. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  4. Mission of China to the EUProgress on China-EU Cooperation
  5. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  6. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  7. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  8. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  9. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  10. UNICEFCalls for the Protection of Children in the Gaza Strip
  11. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  12. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight

Latest News

  1. How Russian propaganda depicts Europe - should we worry?
  2. MEPs tell Chinese ambassador of concerns on trade
  3. Greenland votes with eye on independence
  4. EU court delivers blow to anti-abortion activists
  5. Hungary activists defiant after 'Soros Mercenaries' attack
  6. European Commission proposes whistleblower protection law
  7. Secrecy of VW fraud report 'unacceptable', says MEP
  8. 'Strong suspicion' of corruption in Council of Europe assembly