International Tax Review: What do you think about individual member states, such as France, pressing ahead with a FTT unilaterally? Do you believe their strategy will be effective?

Manfred Bergmann: Such initiatives are difficult to judge without knowing the details. If they were intended to establish an interim but rather narrowly-defined tax towards a neutral and all-encompassing European solution, they should of course be welcomed for as long as they create additional momentum towards such a European solution.

However, in case they were to substitute for such a solution, my enthusiasm for such national initiatives would be rather limited. Also, and in the light of the Swedish experience of the late 1980s, proponents of such initiatives would have to go for a rather carefully crafted design of such national taxes.

I can understand that some member states do not want to be held up by the slowest ship in a convoy and want to leave the convoy and move ahead faster. After all, tax harmonisation in Europe in the field of indirect taxes is ruled by Article 113 TFEU (Lisbon Treaty), and requires unanimity in the Council. The risk is that such national initiatives do not muster the critical mass that would avoid turning business models based on neglecting certain national markets as proving not sustainable. In response they might feel seduced to give up the principle of tax neutrality or the residence principle. In consequence, they might then on the one side discriminate against trading in securities issued by residents or discriminate against trading on national trading platforms. On the other side, they might privilege certain transactions, such as the trading on own account of financial institutions (also called "market making"), or they might be inclined to give preferential tax treatment for public borrowing as compared with private borrowing.

At the end of the day, such national initiatives might only result in taxing the trading undertaken by private households and companies not belonging to the financial sector. This would then be the opposite of what had been aimed at with the European FTT initiative in first place.

ITR: How will the Commission ensure banks do not pass the tax on to customers?

MB: According to available estimates, about 80 to 90% of all transactions for which an FTT would be due are transactions where financial institutions trade in their own name and on their own account. It is difficult to see, how in such cases the customers, such as private households or non-financial companies should be held responsible for taxes to be paid on such transactions.

Instead, it will be the shareholders of the banks, who benefit (in case of profits made) or who lose (in case losses occurred) from such transactions. These should then also be those who would have to pay the tax, unless financial institutions factor in the tax into their bids on the markets and ask their counterparty to shoulder the incidence of the tax.

However, there might indeed be a pass-through risk in the event that financial institutions intervene when a private household intends to buy or sell some shares or a company wants to hedge a currency risk or the risk of volatile commodity prices. But even in such cases, the effect should not be dramatic, given the low tax rates proposed. When a private household buys shares in the value of €10,000 ($13,000) or a company wants to hedge a currency risk for an amount of €600,000 the bank might charge the imputed tax of such transactions. But this would be €10 for the private household and of €60 for the company only - on top of the fee the banks would levy in any case. This should not be dramatic or alter investment strategies of private households or hedging strategies of companies not belonging to the financial sector.

ITR: What is the timetable ahead of you for proceeding with the FTT?

MB: The Commission tabled its proposal in September 2011. In December, discussions at the working level started in the Council. I expect the first reading of the proposal in the working party "taxation questions" of the ECOFIN council to be finished by early March 2012. This would then open the window for a first policy orientation debate in the ECOFIN Council later in March. Thus, towards the end of the Danish Presidency – in June 2012 – we should have a clearer idea on the first reception of the Commission proposal in ECOFIN and on the way ahead.

Part one of the interview, in which Bergmann defends the FTT against its critics, can be read here