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Bob van der Made |
The highly controversial European Commission proposal for the introduction of an EU-wide financial transaction tax (FTT) in Europe from January 1 2014 was shot down on March 30 during an informal gathering of the EU member states' finance ministers (ECOFIN) in Copenhagen, after it became apparent that there was never going to be unanimous support among the EU-27 for the proposed approach.
According to reports in the press, Germany presented an alternative proposal at this meeting which aims to ensure unanimous approval among the EU-27 for the introduction of a FTT in Europe. The German "non-paper" presented by German finance minister Wolfgang Schäuble to his European counterparts proposes, it is reported, a two-step approach. As a first "intermediate" step, an EU–wide stamp duty on share transfers should be introduced, inspired by the existing UK stamp duty regime and the French FTT which is to come into force in August 2012 in France. As a second step, in the medium term, an additional EU-wide proposal should for instance also cover bonds and derivatives.
The ECOFIN reached agreement that a special working group led by Germany will now look into this alternative to the Commission's proposal. The special working group will report to the ECOFIN Council during a "policy orientation debate" on FTT scheduled for June 21 2012.
Especially the UK and Sweden have rejected the Commission's proposal from the outset, backed by Ireland, Luxembourg, Malta and The Netherlands. Germany and France have been the most ardent proponents of the Commission's approach, which was also generally backed by the European Parliament. A majority of the 17 eurozone EU member states – Germany, France, Italy, Spain, Belgium, Austria, Portugal, Finland and Greece – called on the Danish EU Presidency in a joint letter on February 7 this year to fast-track agreement on the Commission's FTT plans.
FTT is seen as extremely attractive by quite a few politicians in Europe as a way to raise revenues and make the financial sector pay its "fair share"to the costs of the crisis. There is still a lot of pressure and huge political will to move forward. The ECOFIN in June should shed more light on when and how – probably not if – FTT will be introduced in Europe.
Bob van der Made (bob.van.der.made@nl.pwc.com), Brussels and Amsterdam
PwC
Tel: +31 88 792 3696
Website: www.pwc.com
