EU financial transaction tax ‘won’t come before 2016’
Selected euro zone countries will implement a planned tax on financial transactions in 2016 at the earliest, their finance ministers agreed on Monday according to diplomats, leaving unresolved the much-disputed design of the levy.
Having failed to garner global support, Germany and France have led European efforts to introduce a trading tax, seen by some as a vote winner at a time of public anger over bankers’ bonuses and fines on lenders for rigging interest rates.
Two diplomats with knowledge of the negotiations told Reuters on Monday finance ministers from the 11 euro zone countries had agreed to have a legal basis for the tax ready by year-end and planned to implement it by 2016.
The ministers were due to present this to their European Union colleagues in a statement on Tuesday, said the diplomats, who asked not to be named.
However, the extent and level of the tax are still undecided and there have been splits over what the tax should include. This will probably mean that the scope of the tax will be watered down, something German Finance Minister Wolfgang Schaeuble alluded to on Monday.
“The interests of the participating countries are so different that we can only implement a limited taxation of shares and some derivatives in the first step,” Schaeuble said ahead of a meeting on the tax in Brussels on Monday.
The tax, intended as a way of clawing back some of the taxpayer cash paid to shore up banks in the 2008-2009 financial crisis, could include a small charge on each stock, bond and derivative transaction carried out in the 11 countries.
Germany and France, among the 11 countries backing a tax, have pledged to reach a broad deal in time for the European Parliament elections on May 25, hoping to win votes with the issue.
Schaeuble backs a phased-in approach, starting with shares, and including derivatives at a later stage.
All this is a far cry from the European Commission’s original proposal with its “big bang” start in January for stocks, derivatives, bonds, repurchase agreements, securities lending and borrowing, and units in mutual funds.
Even a phase-in is already raising concerns, however, as it would mean a collection system would still have to be in place from day one, while revenues would only build slowly.
Officials in Brussels originally expected the tax, imposed on the broadest set of securities, to raise up to €35bn a year. The redesigned levy is now expected to raise only a fraction of that.