By Nick Mann | 23 January 2013
European Union finance ministers have given 11 eurozone countries the go-ahead to set up a financial transaction tax.
Germany and France are among the group that can now move forward with the project, which comes after the plan for an EU-wide transaction tax was abandoned due to lack of support. Four EU member states, including the UK, abstained from yesterday’s finance ministers’ vote.
The 11 member states will proceed with the FTT under ‘enhanced co-operation’ – an EU power allowing a limited number of member states to implement a particular measure.
Plans for the new levy will be based on the European Commission’s proposals for an EU-wide tax. This involved a minimum 0.1% tax being levied on all financial transactions in the union – expect derivatives where a lower rate would be involved.
Algirdas Šemeta, the European Commissioner responsible for taxation, said the agreement was a ‘major milestone’ for both the EU and global tax policy.
‘For the first time ever, the financial transaction tax will be applied at regional level. A bloc representing around two-thirds of EU gross domestic product will implement this fair tax together, answering the long-time calls of their citizens. And in doing so, they can pave the way for others to do the same.
Calling on other EU member states to join the group of 11, he said there was ‘everything to gain’ by being part of the tax.
‘The considerable new revenues it will generate can be used for growth-friendly investment, and to support wider policy commitments such as development. Taxation will become fairer, as the financial sector makes a proper contribution to public finances and the costs of the crisis.
‘And the Single Market will be strengthened, as a patchwork of national approaches is replaced with one harmonised FTT. This can only make life easier for businesses, by reducing compliance costs and increasing legal certainty.’
UK business leaders warned that the tax would be ‘damaging for jobs and growth’ and welcomed their government’s decision to reject the plans.
Matthew Fell, director for competitive markets at the CBI business group said: ‘It is disappointing that eurozone economies are pursuing the FTT, whose costs ultimately fall on consumers and businesses, and will be a drag on the eurozone recovery.
‘This tax must not impinge on non-participating member states by including extra-territorial reach into financial services activity conducted in the UK.
‘As the UK’s largest single trading partner, a healthy European economy is in everyone’s interests so we urge participating member states to reconsider this tax,’ he added.
The countries involved in the FTT are: Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia.
