Finance ministers admit defeat on financial tax

Group of countries likely to proceed using ‘enhanced co-operation’.
European Union finance ministers today admitted that they cannot agree on a financial transaction tax – but a group of member states will discuss pressing ahead with the idea. Margrethe Vestager, Denmark’s finance minister, who chaired today’s meeting of the EU’s 27 finance ministers in Luxembourg, said it was clear that there was a “significant number” of countries who wanted to go it alone. 

EU rules stipulate that there need to be at least nine member states on board to launch ‘enhanced co-operation’, the process that allows legislation to be introduced in a limited number of countries. A qualified majority of all 27 member states would have to agree to the procedure, which has been used only twice before. 

After today’s meeting it was not clear exactly how many countries would ask the European Commission to draw up the necessary legislation, with several finance ministers saying that they would have to discuss the matter further with their cabinet colleagues. 

Algirdas Šemeta, the European commissioner for taxation, said that a financial transaction tax for all 27 member states was his preferred option but that “enhanced co-operation is better than no result at all”. 

The Commission published its proposal for an FTT in September, suggesting a 0.1% levy on share dealings and 0.01% on the trading of other financial products. 

Jan Kees de Jager, the Dutch finance minister, told the meeting: “We are not against a financial transaction tax per se but we think alternatives must be examined. 

“We have not explored all alternatives yet and today is not the time to take a decision.” 

Other countries indicating strong opposition included the UK, Ireland and Luxembourg. 

Luc Frieden, the finance minister of Luxembourg, said that there were “some fundamental questions that have not been dealt with”, including how the proceeds of such a tax would be used. 

“I would like the Commission to say that enhanced co-operation would not undermine the internal market,” he said. 

Finance ministers who indicated that they were strongly in favour of starting enhanced co-operation included those of Austria, Belgium, France, Germany, Italy and Portugal. The finance ministers of Finland, Romania and Spain expressed reservations about an FTT but hinted that they were willing to participate.   

Now that finance ministers have acknowledged that EU-wide agreement is impossible, at least nine countries would have to send a letter to the Commission detailing how they see the scope and objectives of the proposal. 

If the Commission agrees that enhanced co-operation is being used as a last resort and that it will not have a negative impact on the single market, it will launch an enhanced co-operation proposal that would then have to be approved, by qualified majority, in the Council of Ministers. 

A normal legislative proposal would then begin, needing agreement from the European Parliament and the countries taking part.