Busy day at ECOFIN – but no progress on a financial transaction tax

On Tuesday this week, the ECOFIN Council met to deliberate on several big dossiers, including a proposal on a financial transaction tax (FTT). It was a busy day at ECOFIN which, in CESI's view, unfortunately did not see much progress towards an FTT.

Busy day at ECOFIN – but no progress on a financial transaction tax

The agenda of the meeting was certainly heavy and the outcome extensive in quantity.

A heavy agenda: Corporate taxes, tax transparency … and FTT

The Council had several debates and made a number on decisions with regards to fair corporate taxation and tax transparency agreements with Liechtenstein, San Marino and Switzerland. The Council also discussed, once again, on a proposal introducing a financial transaction tax (FTT). The ministers were informed that a group of 10 EU Member States (Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain) have agreed on the principal parameters of a common FTT in their countries, to be implemented via the method of ‘enhanced cooperation’.

Wanted and needed: Progress on an FTT

Although its seems that discussions on an FTT (via enhanced cooperation, not even EU-wide!) are advancing substantially, CESI regrets that the ECOFIN Council did not actually agree on anything new. On the contrary: The ministers missed another chance to move the FTT file forward.

The Commission’s original FTT proposal, which envisaged an EU-wide FTT, was blocked in mid-2012 by ECOFIN when the national finance ministers decided that they could not reach an unanimous agreement on it. In September 2012, the abovementioned group of 10 Member States, willing to move forward, asked the Commission to be allowed to introduce, via enhanced cooperation, a common FTT in their countries based on the scope and objectives of the Commission’s initial proposal. The Commission then proposed to the Council to authorise the enhanced cooperation requested by the Member States in question, which was accepted. Since then, nothing has happened. Yesterday, the Council only decided to continue working on the file – nothing concrete. 

CESI Secretary General Klaus Heeger said: “In times of tight public budgets, I cannot see a reason for the Member States to not introduce a common financial transaction tax. They could use revenues from it to engage in necessary investments in education, care and other services of general interest.”
Indeed, it is commonly estimated that the EU Member States could raise a total of 57 billion euros per year by charging 0.1% against the exchange of shares and bonds and a mere 0.01% on derivative contracts.
Mr Heeger added: “A financial transaction tax would also be a fantastic tool to make Europe more socially just again. The tax would hit almost exclusively financial speculators and could be used for future-oriented social inclusion and welfare programmes.”

Picture: © European Union