Friday

20th Jan 2017

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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The European Commission initially proposed an EU-level FTT for all 27 member states in 2011, but the idea was withdrawn after a number of countries led by the UK, Sweden and the Netherlands, refused to back it.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

Brexit men launch anti-EU website

Westmonster, modelled on hard-right US websites, said it was: "Pro-Brexit, pro-Farage, pro-Trump. Anti-establishment".

Stakeholders' Highlights

  1. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  2. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  3. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  4. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  5. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  6. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  7. European Free AllianceMinority Rights and Autonomy are a European Normality
  8. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  9. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  10. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London
  11. PLATO15 Fully-Funded PhDs Across Europe on the Post-Crisis Legitimacy of the EU - Apply Now!
  12. Dialogue PlatformInterview: Fethullah Gulen Condemns Assassination of Russian Ambassador to Turkey

Latest News

  1. 'Be patient,' ECB chief tells Germany
  2. EU cannot copy Australia's offshore asylum model
  3. Brexit men launch anti-EU website
  4. Germany details its 'Marshall Plan' for Africa
  5. IMF predicts 'pain' for UK, as banks prepare London exit
  6. EP deal could help Tusk keep Council job
  7. UN struggles to monitor fate of readmitted Syrians in Turkey
  8. European space chief: Moon village is 'more or less a fact'