25 Jun 2012

EU-wide financial transaction tax shelved

European Union economic and finance ministers have shelved the idea of a union-wide financial transaction tax

They have concluded that there is no consensus about the tax, nor is one likely to be reached given the vociferous opposition of various member states including the UK, Denmark, Sweden and the Netherlands.

The EU proposal would have imposed a charge on banks of 0.1% of the value of sales of stocks or bonds and 0.01% on each derivative contract. France and Germany, which have come out strongly in support, see the tax as a means of raising funds to help the eurozone through its crisis.

After the Ecofin meeting – the last one before the Danish hand over the EU presidency to Cyprus on 1 July – a group of member states that are keen on the idea announced that they intended to press ahead with implementing some form of the tax and would be negotiating a separate “enhanced cooperation” agreement. As well as France and Germany, the group includes Austria, Greece, Italy, Portugal and Spain.

However, as negotiations even between like-minded states are notoriously difficult and the member states have different ideas about the form the financial transaction tax should take, actual implementation is likely to be some time off.


Julia Irvine