France wants FTT in place ‘before the end of the year’

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Paris hopes to clinch an agreement before the end of the year to launch an ‘enhanced cooperation’ mechanism allowing a small group of at least nine EU countries to move forward on a financial transaction tax (FTT), French European Affairs Minister Bernard Cazeneuve said yesterday (24 September). 

Cazeneuve was speaking at the European Policy Centre (EPC), a Brussels think tank, just after he emerged from a meeting with the 26 other European affairs ministers, where the EU budget for 2014-2020 was discussed.

The French minister-delegate for European affairs admitted that the minimum number of countries had not been reached to launch and "enchanced cooperation" on the FTT, which his government strongly supports.

According to EU law, at least nine countries are needed to launch an enhanced cooperation procedure, which allows a smaller group of nations to break ranks and move forward on an issue that fails to gather the required majority.

The minister explained that France's objective was "to hit two targets with only one gun" – namely having a strong EU budget as an aggregate of national contributions, and ensuring that countries keep strict budget balances. That’s why France was keen on supplementing the EU budget with “own resources”, he said.

Size matters

“We are in negotiations with a number of countries which is around this key number [of nine countries]," Cazeneuve said. He added that not only the number mattered, but also the economic weight.

In September 2011 the Commission published a detailed proposal for a levy on financial transactions. According to the proposal, the FTT would apply to any transaction in financial instruments, excluding primary market issuance, and bank loans. Share and bond transactions would be taxed at 0.1% of the higher of consideration and market value and derivatives at 0.01% of their notional amount. The FTT would be due if at least one party to a transaction is based in the EU.

Germany and France, the main proponents of tax convergence, first pushed for EU-wide implementation from the beginning of 2014, but then agreed to resort to the enhanced cooperation mechanism. In this case, France wants to introduce the FTT this year.

“We work in order to be able, before the end of the year, to send to the European Commission the letter, which would allow, before the end of the year, to make effective this financial transaction tax. We are not far from the number which would be convenient for sending out this letter,” Cazeneuve said.

According to EurActiv France, French MP Philip Cordery recently lamented that “not even eight countries” were prepared to launch the FTT. Reportedly, France, Germany, Austria, Spain, Greece, Poland, Italy are pushing for the idea, but some of them appear to have different views if the proceedings from such a tax should feed the EU budget. 

France 'favourable to political union'

Turning to institutional matters, Cazeneuve made efforts to convey the message that France supported Germany's call to modify the EU treaty, after the ratification of the fiscal compact treaty on budget discipline.

“I came to tell you that France is favourable to the political union,” he said.

He added however, that until treaty change happens, in situations of urgency, all the possibilities of the existing treaties should be utilised.

Cazeneuve pleaded for “solidarity”, referring to countries like Spain or Italy, which need the help of the eurozone and of the European Central Bank to be able to refinance themselves.

“Solidarity is just as inescapable as the euro is irreversible,” he said.

Asked by EurActiv to comment on the recent ideas for a special budget for the eurozone, Cazeneuve indicated that France was looking favourably to such option, which he said “should not be a taboo”. However, he added that it was up to European Council President Herman Van Rompuy to seek common ground in view of its eventual implementation.

However, the discussion held by the European Affairs ministers yesterday on the overall EU budget for 2014-2020 only reinforced already deep divisions between the different groups of countries.

The “friends of better spending”, led by Germany and the net contributors to the EU budget, opposed the “friends of cohesion”, namely new members from Central and Eastern Europe. The “friends of better spending” want cuts in all the headings of the EU budget, while Eastern Europeans oppose cuts in cohesion policy. For its part, France doesn’t want any cuts to direct aid to its farmers.

“The Common Agricultural Policy will not serve as a bargaining chip,” Cazeneuve warned.

Timeline: 
  • 18-19 Oct. 2012: Interim report on finalising the economic and monetary union to be presented by Van Rompuy at EU Summit in Brussels
  • 22-23 Nov.: Special EU summit to take 2014-2020 EU budget discussions at highest level for the first time
  • 13-14 Dec. 2012: Final report and roadmap for further economic and monetary union to be adopted by EU leaders at Brussels summit. Final decision on 2014-2020 EU budget expected, but not certain.
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