http://www.spiegel.de/international/europe/0,1518,820779,00.html
http://www.bloomberg.com/news/2012-03-13/financial-transaction-tax-plan-divides-eu-ministers-in-brussels.html
Since the start of the European debt crisis, there have been repeated calls for a financial transaction tax to be introduced within the European Union. Now German Finance Minister Wolfgang Schäuble and eight of his EU colleagues are pushing for such a tax to be finalized by the middle of the year.
"We strongly believe in the need for a financial transaction tax implemented at (the) European level," the finance ministers wrote in a joint letter to Danish Finance Minister Margrethe Vestager, which has been seen by SPIEGEL. Denmark currently holds the rotating EU presidency.In order to reach a "rapid outcome," the ministers write that they would "welcome very much a decision by the Presidency to accelerate the analysis and negotiating process." Alongside Schäuble, the signatories include French Finance Minister François Baroin and Italian Prime Minister Mario Monti, who is also the country's finance minister. In the letter, the ministers call for the process to be completed within the Danish presidency, which runs until the end of June. Discussions should be started on compromise proposals "to overcome any difficulties," they write.
The issue of a transaction tax is expected to be discussed at the meeting of EU finance ministers in Brussels on Monday and Tuesday. The Danish EU presidency confirmed that the tax was on the agenda. "I do not expect that we will draw any final conclusions at this meeting but we will return to the matter at a meeting (of EU finance ministers) towards the end of the Danish presidency," Finance Minister Vestager said in a statement Monday.
Competing Models
Schäuble has tasked the German Finance Ministry with developing its own proposal for a financial transaction tax, SPIEGEL has learned. He has told the ministry's taxation department to work toward a comprehensive solution. According to Schäuble's vision, the new levy would apply to all financial transactions, including stock and bond sales, currency transactions and all kinds of derivatives. At the same time, the German finance minister wants the proposals to be simpler and more practical than the model which the European Commission presented in September 2011.
The tax proposed under the Commission's model would be paid in the European country where the financial institution is located, and would be levied on the sale of shares and bonds as well as on derivatives. The Commission calculates it could raise €57 billion ($75 billion) per year. The proposal has, however, been met with stiff resistance from countries such as the United Kingdom, which fears for the impact on the City of London, Europe's top financial center.
Meanwhile, the opposition center-left Social Democrats are considering linking the issue of a transaction tax to the planned European fiscal pact. The German parliament, the Bundestag, is scheduled for a May 25 vote on the pact, which was agreed upon by 25 EU member states at a summit in January.
The SPD leadership is coming under increasing pressure from its youth wing, the Young Socialists, to support the fiscal pact in the Bundestag only if the government commits itself to a financial transaction tax. "As long as the financial transaction tax is being blocked, the SPD can not approve a fiscal pact," the Young Socialists executive committee wrote in a resolution.
Dependent on Opposition Support
The fiscal pact will have to be approved by a two-thirds majority in the Bundestag, as it impacts on the parliament's budgetary authority. That means that Chancellor Angela Merkel's government will be dependent on SPD support to get the pact approved.
SPD leader Sigmar Gabriel said that his party was insisting on such a tax in talks with the government over the European fiscal pact. "The voting behavior of the SPD depends on the results of the negotiations," Gabriel told the news agency DPA.Many SPD members advocate a transaction tax to help overcome the crisis. "A speculation tax could be used to provide stimulus for growth and employment," said Ralf Stegner, head of the SPD's group in the Schleswig-Holstein state parliament.
The government itself is split over the issue. The business-friendly Free Democratic Party (FDP), which governs in coalition with Merkel's conservative Christian Democratic Union and its Bavarian sister party, the Christian Social Union, has previously opposed a financial transaction tax. They are now coming under pressure to change their position. Some FDP politicians, such as Wolfgang Kubicki, the FDP floor leader in Schleswig-Holstein, are urging willingness to compromise on the issue.
and...
European Union finance ministers remain divided on a financial-transaction tax, with France, one of the main backers of the levy, saying it will allow more time to reach an accord.
The ministers did not reach any decisions during debate in Brussels today. They called for more study how much tax banks pay and pledged to reconsider the issue later this year, along with possible alternatives to the EU’s existing proposal.
Economic and monetary affairs commissioner for the European Union Olli Rehn, left, and Denmark's economy minister Margrethe Vestager, center, listens as France's finance minister Francois Baroin, speaks ahead of a European Union finance ministers meeting at the European Council headquarters in Brussels. Photographer: Jock Fistick/Bloomberg
“We hope for an accord that’s as broad as possible, and we will take the time necessary to find as large an accord as necessary, which is what’s wanted by the citizens of Europe,” French Finance Minister Francois Baroin said as he arrived at the meeting. France in the past has pressed for speedier passage by a smaller group of nations if no broader coalition emerges.
The European Commission, the EU’s regulatory arm, has proposed a wide-ranging tax on trading of stocks, bonds, derivatives and other financial contracts. The commission says the tax could raise 57 billion euros ($75 billion) annually if implemented throughout the region, while also discouraging transactions like high-frequency trading that it considers more risky for the financial system.
Agreement Hopes
German Finance Minister Wolfgang Schaeuble said the EU should continue to strive for agreement among all 27 member countries. At the same time, he said ministers should not back away from the topic in the absence of global or EU-wide consensus.
“I hope we will get it,” he said during a public debate. “‘If not, I think we are obliged to concentrate on looking for alternatives. The outcome of nothing would be disastrous.’’
The U.K., Sweden, Luxembourg and Malta are among the tax’s skeptics, and these nations today reiterated their longstanding positions.
The U.K.’s position is ‘‘unchanged,” although it concurs that banks should pay their “fair share” of regulatory costs, said U.K. Treasury Minister Mark Hoban, standing in for Chancellor of the Exchequer George Osborne. Hoban said it’s not clear that banks would pay more overall tax if a broad levy were included, since banks might find offsetting gains from other parts of the tax code.
‘Increase Costs’
The Brussels-based commission and Denmark, current holder of the EU’s rotating presidency, have urged more technical work to find a widely accepted compromise. Tax Commissioner Algirdas Semeta said today the EU is working on further analysis that it aims to bring out before a working-group meeting in April.
Sweden’s Finance Minister Anders Borg said a tax was a bad idea while European countries are seeking to boost growth and cut debt. “A financial-transaction tax would be difficult to accept,” he said. “It would increase household lending costs, it would increase the cost for companies and it would increase the cost for government, so it is a proposal that is not good for European growth.”
The U.K., which already has a so-called stamp tax, has said it will oppose any new transaction tax that doesn’t come with backing from the Group of 20 major nations. Luxembourg’s Finance Minister Luc Frieden said a tax is impossible without Britain, home to Europe’s largest financial sector.
“Without the U.K. there will be no transaction tax,” Frieden said on his way into the meeting. “I think the principle of the tax is OK, but that all 27 states have to participate.” During the public debate, he said the EU should reconsider its geographic approach for applying a transaction tax and should also consider the tax’s impact on jobs and the overall economy.
Dutch Finance Minister Jan Kees de Jager said an EU-wide financial-transaction tax would cause a “very big shift” in trading location.
Nine officials, including Schaeuble, Italian Prime Minister Mario Monti and Baroin, have sent a joint letter to the Danish EU presidency calling for faster talks to introduce the tax.
and...
http://www.telegraph.co.uk/finance/financialcrisis/9140601/EU-leaders-are-using-the-financial-transaction-tax-to-hide-a-Spanish-led-revolt-against-Germany.html
EU leaders are using the financial transaction tax to hide a Spanish-led revolt against Germany
You can always tell when European leaders are rattled: the Financial Transactions Tax (FTT) races to the top of the agenda.
12:14PM GMT 13 Mar 2012
96 CommentsLove it or hate it, a 0.01pc levy on transactions made by banks is entirely irrelevant to solving the advancing debt crisis.
So why - with Greece’s €130bn bail-out signed but probably inadequate and a raft of sinner states teetering under their debt loads - have European leaders said today’s summit in Brussels will focus on a bank tax?
Summit groupies will have seen this before: it can mean leaders have reached deadlock, need more time - and almost always that they need to butter up the northern European electorate.
In the face of any hurdle the FTT is the technocrats’ boxing ticking dream: look busy; raise money; smack banks; tackle a complex, cross-border issue; and kick over-achieving London while you’re at it.
So what are they hiding this time? In a word Spain. In a few words, the stirings of a radical retaliation of “sinner states” against the German-led imposition of austerity and central rule.
Let’s start with Spain.
Throughout February and probably before, officials from Madrid pleaded with Brussels for permission to relax their deficit targets, arguing that Spain, with youth unemployment soaring over 50pc, couldn't take any more austerity. The answer was firm and consistent: nein, non, niet.
At the beginning of March, leaders gathered in Brussels to sign their "non-negotiable" fiscal pact, binding all European countries (except Britain and the Czech Republic who opted out) to tough rules on budget discipline. Angela Merkel was tickled pink: the deal would last forever, she said.
But with sensational timing, Mariano Rajoy announced Spain would break the rules, immediately.
The quietly spoken prime minister said Spain would aim for a deficit target of 5.8pc of GDP for 2012. He acknowledged this was far above the 4.4pc set by authorities in Brussels but said he’d chosen his target rather than taking €44bn from the budget at a time of economic crisis.
The new figure was both “sensible and reasonable”, he said, and a “sovereign decision made by Spaniards.”
At a stroke Rajoy had demonstrated breath-taking defiance, heart-warming patriotism and a different path to recovery.
Even worse, he pointed out the elephant in the room: the eurozone is a monetary union, not a political one, and if members want to run their own affairs, neither Brussels nor Berlin can stop them.
After days of silence, last night in Brussels finance ministers asked Spain to set a deficit target of 5.3pc. Not only is the figure a massive leap in Madrid’s direction, but the language was completely different too.
In a statement, the ministers expressed hope rather than demand: “The Spanish government expressed its readiness to consider this in the further budgetary process,” it said.
So maybe the tables have turned. Greece is small enough to bully but Spain - and Italy, Portugal and Ireland - are all big economies, without which the eurozone would disintegrate.
If Merkel’s austerity drive is unacceptable to these members, if they are prepared to simply ignore hard-fought fiscal pacts and do their own thing, what next? A new plan? A new strategy? New leaders?
Time to get out the FTT, quick.
and.....
http://www.spiegel.de/international/europe/0,1518,820965,00.html
It's being greeted as a breakthrough -- but it remains open whether it really is. When the 27 European Union finance ministers meet in Brussels on Tuesday, they plan to discuss the introduction of a financial transaction tax in Europe. It's the first time that the issue has been on the agenda at such a meeting, and supporters of the tax argue that is a sign that the tax is making progress in its long journey through the EU's institutions.
Indeed, a certain amount of progress can be seen in the ongoing battle over a tax on financial transactions -- at least on paper. French President Nicolas Sarkozy and German Chancellor Angela Merkel, the EU's two most powerful leaders, have made the issue a priority. And in September 2011, the European Commission presented a draft directive which foresees a financial transaction tax on all stock, bond and derivative transactions within the EU. The tax could come into force in 2014 -- provided all 27 EU members agree to it.Therein lies the rub. There is little chance of such an agreement. Officially, supporters of the tax are still hoping for the "comprehensive solution," as the Commission's proposal is dubbed by the German government. But an agreement is already regarded as a pipedream. A whole row of naysayers, led by Britain and Sweden, are opposed to the tax unless it is introduced globally. They consider it to be detrimental to growth and fear that they will become less competitive on the international playing field if they introduce a tax. The unanimity principle applies to tax matters within the EU, so even a single veto would be sufficient to derail the plan.
Considerable Resistance
Internally, the governments in Paris and Berlin seem to have already accepted the fact that some EU partners cannot be convinced. As a result, talk in recent months has focused on the idea of only introducing the tax in the euro zone. But even this contingency plan seems doomed to failure. The euro zone is divided on the issue, as can be seen from a letter that was recently sent to the Danish finance minister. In it, nine euro-zone members called for Denmark, which currently holds the EU's rotating presidency, to "accelerate" efforts to introduce the financial transaction tax. It was signed by the finance ministers of Germany, Austria, Finland, France, Belgium, Spain, Portugal and Greece, as well as Italian Prime Minister Mario Monti, who is also the country's finance minister.
The most significant thing, however, is the fact that eight euro-zone countries did not sign the letter, namely Ireland, Netherlands, Luxembourg, Slovakia, Slovenia, Estonia, Malta and Cyprus. Admittedly, they are not the largest and most influential countries in the currency union, and not all of them are explicitly opposed to the tax -- but some of them are putting up considerable resistance.
For example, the Irish government, with an eye to neighboring Britain, only wants to introduce the financial tax if the rest of the EU plays along. Sources in Dublin say that, as long as the tax does not apply in London, the Irish will not support it. The coalition government of the conservative Fine Gael and the center-left Labour Party are worried about the prospects for its young international funds sector, which the republic has wooed and supported over the past three decades. Should a levy be introduced only in the euro zone, Dublin fears that many companies would simply move from Ireland to London. Unlike financial firms' routine threats to move to Asia, which are usually empty, this risk has to be taken seriously.
There are similar reservations in the Netherlands. Two recent studies by the Dutch central bank and the country's independent statistical agency have advised against the financial transaction tax. The minority conservative coalition government, which is dependent on support from the opposition center-left Labour Party on European issues, has so far not taken a position on the issue, and is said to be examining the proposals. They are in fact playing for time: The government is hoping that the issue will resolve itself.
In Slovakia, which previously opposed the tax, the political situation has taken a decisive turn. After the victory of Robert Fico and his center-left Direction - Social Democracy party in this weekend's election, Slovakia has suddenly joined the ranks of the tax's supporters. It is not hard for the country to support the levy, as it has no significant financial sector and therefore does not need to fear any side effects.
The Stamp Solution
Nevertheless, there are still plenty of governments that are opposed to the euro zone going it alone in introducing the tax. The government in Luxembourg is divided. Even in Germany, where Merkel's conservatives are pushing for the tax, their junior coalition partner, the business-friendly Free Democratic Party (FDP), opposes it.There is, however, a possible way out of the impasse. A number of parties, including Germany's FDP, have proposed, as an alternative to a comprehensive financial transaction tax, a so-called stamp duty based on the British model. In London, stamp duty already applies to trades in stocks, but not to bonds and derivatives. Such a stamp duty already exists in Ireland, and France will also introduce one in August, if Sarkozy gets his way.
The advantage of opting for a stamp duty would be that it would probably be possible to get all 27 EU members on board. There is, however, one serious flaw in the plan. The Europeans would have failed in their goal to curtail speculation in complex financial products.
