Luxembourg Backs UK FTT Opposition
25 April 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas (Tax-News.com, Brussels)
During a visit to London, Luxembourg's Finance Minister Luc Frieden underlined his support for the UK's decision to challenge the authorization of "enhanced cooperation" for the introduction of a tax on financial transactions (FTT).
The UK recently launched a legal challenge relating to the FTT, which 11 European Union (EU) countries intend to sign up to under EU provisions for enhanced cooperation between members.
Without providing details as to the precise form that Luxembourg's backing of the UK decision takes, Finance Minister Frieden made clear his reluctance to participate in an initiative which he claims threatens the level playing field among financial centers.
Frieden had already set out the Principality's position on an FTT on the margins of the International Monetary Fund (IMF) and World Bank gathering in Washington. At the time, the Minister stressed that it is "essential" that a consensus is reached on the objectives of such a tax, and that these are then "clearly defined." Frieden also underlined the importance of analysing the potential impact of the levy, to ensure that growth is not affected by a possible relocation of certain transactions and investment fluxes.
Finally, Finance Minister Frieden insisted that the tax should be applied by all jurisdictions at European Union or preferably at G20 level, given the international nature of the levy. Echoing this stance, the IMF has also advocated that the FTT be applied at global level.
Lamenting the UK Prime Minister's decision, Austria's Chancellor Werner Faymann warned that opposition to enhanced cooperation is simply "the wrong signal" at a time when tax revenues are urgently needed for areas such as education and youth employment. The FTT provides the necessary scope for investment in the future of Europe, Faymann maintained. The Austrian Chancellor also argued that the financial sector's contribution to the costs of the crisis also has a steering effect. All 11 EU member states are continuing work on the introduction of the tax, Faymann ended.