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Germany: German parties intensify call for transaction tax

Wednesday, 13 June 2012   (0 Comments)
Posted by: SAIT Technical
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By Derek Scally (Irish Times)

GERMAN POLITICAL wrangling over the fiscal treaty has taken on a new urgency, with opposition parties insisting a Spanish bailout can only happen with agreement on a financial transaction tax.

Until now, opposition parties made such a tax a condition of their crucial parliamentary support for a joint Bundestag vote on the fiscal treaty and the European Stability Mechanism bailout workings.

They hoped to use their parliamentary votes as leverage to push through a tax at European level, despite reservations of Chancellor Angela Merkel's junior coalition partner. Now they have calculated that the weekend announcement from Madrid has given them further leverage with the government anxious not to fall behind in the ratification of a treaty it demanded of its European partners.

"The Spanish bank rescue cannot become a precedent, therefore it is important that a European transaction tax is agreed, bindingly, before further help is given to banks,” said Carsten Schneider, budgetary spokesman for the opposition Social Democrats.

The opposition Green Party was similarly outspoken, saying the banking industry needed to be brought to heel before its deputies would agree a bailout for Spanish finance sector.

"The banking industry helped cause the crisis and thus it needs to be brought to its responsibility, that is something the Spanish disaster has made clear to all,” said Jürgen Trittin, parliamentary leader of the Green Party.

"We want a water-tight cabinet decision on a financial transaction tax and visible efforts for a European initiative before the next EU summit, preferably with France.”

After weeks of very public brinkmanship, Dr Merkel meets opposition political leaders today in the hope of agreeing a final deal that will give her a two-thirds Bundestag majority on a joint fiscal treaty-ESM vote.

Outstanding political disagreement has seen the planned vote already slip once. Dr Merkel is aware, as opposition parties are, that time is running out for a deal.

With only weeks left in the current parliamentary term, she needs the ESM Bill in particular to be passed in the next two weeks to allow the permanent bailout fund to go live, as planned, next month.

An agreement in principle last week on a financial transaction tax fell apart over the weekend when leading Merkel advisers said they only agreed knowing such a tax could not be rushed through in the last year before the autumn 2013 general election.

Dr Merkel's spokesman insisted yesterday this was not the case and that the chancellor would stand by the promise to push for a tax at whatever level in Europe would guarantee agreement.

"We are not the only ones in Europe who have a say over when such a tax should be implemented, but we will campaign for this with great vigour,” Steffen Seibert said.

"The chancellor is convinced personally of the need for this.”



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