Financial transactions tax gets go ahead

The European Sting on Saturday 19 January wrote that, the “The ECOFIN Council is expected on Tuesday 22 January to adopt the Commission’s proposal to authorise enhanced cooperation on the Financial Transactions Tax”. Indeed today 22 January 2013, the Ecofin Council adopted a decision authorising eleven member states to go ahead with enhanced cooperation on a financial transaction tax (FTT). The European Parliament has already authorised the introduction of the tax. As the Sting then noted: “It is obvious that a financial transaction tax would enable the financial industry, currently under-taxed in relation to other sectors, to make a fair contribution to the public finances. The draft directive would cover transactions relating to all types of financial instruments, including capital market and money market instruments (with the exception of instruments of payment), units or shares in collective investment undertakings and derivative agreements. Transactions with central banks are excluded”. Let’s follow the facts. In summer 2012, it became clear that there was insufficient support for the introduction of a financial transaction tax throughout the EU. Since then, eleven member states have requested the Commission to present a proposal for enhanced cooperation on a FTT, specifying its scope and objective along the lines of the Commission’s original proposal. The Commission could put forward a new proposal as early as February. Enhanced cooperation can be launched at the request of at least nine member states. The eleven member states wishing to introduce a financial transaction tax through enhanced cooperation are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. Any other member state may join the enhanced cooperation, if they so wish. The enhanced cooperation permits to those eleven member states of Eurozone to introduce such an EU tax in their territories only. As a general rule the introduction of an EU tax needs unanimity. The Commission’s original proposal involved a harmonised minimum 0.1% tax rate for transactions in all types of financial instruments except derivatives (0.01% rate). The aim was for the financial industry, which many consider to be under-taxed, to make a fair contribution to tax revenues, whilst also discouraging transactions that do not enhance the efficiency of financial markets.