Germany ditches push for pan-EU tax
25 June 2012
Posted by: SAIT Technical
Germany ditched efforts to win agreement across the European Union on a tax on financial transactions on Friday and will instead push for a core group of countries to introduce a levy that many states have criticised and few are ready to support.
By embarking on this path, the German government hopes to placate demands by the main opposition in its parliament to move towards such a tax in return for their support in approving the euro zone's rescue fund, the European Stability Mechanism.
Germany's lower and upper houses of parliament will vote on June 29 on whether or not to approve the creation of the ESM. Chancellor Angela Merkel is counting on the backing of the Social Democrats to get the required two-thirds majority.
Speaking to fellow EU finance ministers meeting in Luxembourg, Germany's Wolfgang Schaeuble said that he accepted that there would be no agreement across all 27 members of the European Union and would now seek to build a scaled down group.
"My impression is that quite a number of member states strongly support the proposal of an FTT (Financial Transactions Tax) in principle,” he said, during a part of the meeting that was publicly broadcast. "We should give it a try.”
But it was far from clear from Schaeuble's call for a show of hands in the room whether nine countries, the minimum required to launch the so-called enhanced cooperation to pioneer the tax, would ultimately decide to back Germany's drive.
Spain's economy minister said he believed that there were nine countries in favour, of which Spain was one. "We are determined to start the enhanced cooperation,” Luis de Guindos told reporters.
But many ministers were critical of the idea, with some signalling that they could even challenge a smaller group of countries introducing such a tax if it negatively impacted on those not participating.
"We are not convinced of the case,” Michael Noonan, Ireland's finance minister, told the meeting. "The proposals being made are not acceptable to us in particular if applied to fewer than 27.”
Austria, which finds itself in a similar political situation to Germany, also appealed for the introduction of such a tax.
"It is urgent that we have a step forward on the transaction tax,” Austrian Finance Minister Maria Fekter told her peers. "The ESM ratification in Austria depends on such a further step.”