France and Austria sought on Thursday (22 January) to break deadlocked talks with nine other European countries for a financial transaction tax, by proposing that it be applied to cover a wide range of transactions, at low rates, starting next year.
In a joint letter to counterparts from the other countries, the French and Austrian finance ministers also suggested that one of the 11 ministers involved take charge of steering forward negotiations.
Talks have so far floundered over what transactions to cover and at what rate, with countries seeking to win exemptions for assets that would hit their financial sectors particularly hard.
Therefore, a new approach was need to avoid diluting the tax, French Finance Minister Michel Sapin and his Austrian counterpart Hans-Joerg Schelling wrote in the letter.
“This fresh direction would be based on the assumption that the tax should have the widest possible base and low rates,” they said.
Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain missed a year-end deadline to hammer out an outline for the tax as they struggled in particular to agree on what derivatives it should cover.
Britain has long opposed the tax out of fear of driving business away from the City of London, home to Europe’s biggest financial sector.
Sapin and Schelling said the tax would have to be carefully calibrated to avoid the risk driving their own financial industries to other countries while also discouraging speculation, which has from the start been one of its main reasons for being.
France has indicated that it wants FTT, initially designed to be used for development aid, fighting epidemics and climate change, to be diverted entirely to the climate.
In September 2011, the Commission published a detailed proposal for a tax on financial transactions. For four years the member states have been unable to reach an agreement on how this new tax should be implemented.
Under this proposal, the FTT would apply to all financial transactions, except the primary market and bank loans. Transactions on shares and bonds would be taxed at 0.1%, and derivative products at 0.01%. The FTT would have to be paid if at least one of the parties is based in the EU.
As the member states have failed to come to a global consensus, 11 countries have launched an "enhanced cooperation" mechanism, which will allow at least 9 member states to progress on issues of common interest, without being held up by the other countries.
The 11 countries working on the Financial Transaction Tax project are: France, Germany, Austria, Belgium, Spain, Estonia, Greece, Italy, Portugal, Slovakia and Slovenia.
- EURACTIV France: Paris et Vienne tentent une relance des négociations sur la TTF