EU financial transaction tax 'won't come before 2016'
08 May 2014
Posted by: Author: Independent.ie
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
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
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.
This article first appeared on independent.ie.