Revenue sharing among member states appears as the main outstanding issue in order to reach an agreement on the financial transaction tax (FTT), as Spain still opposes the redistribution of resources, European officials told EURACTIV.
Sources close to the dossier said that Italy has also made an alternative proposal to share the revenues.
According to the initial plan put forward by France and Germany, and supported by a majority of the 10 countries involved in developing the so-called ‘Tobin tax’, revenues will be pooled and shared among the countries, regardless of the revenues amassed by each capital.
The FTT would impose a 0.2% levy on shares issued by a company whose market capitalisation exceeds €1 billion and its registered office is established in at least one participating member states.
Under this formula, the expected revenues would reach around €3.5billion, far from the range of €30 billion and €35 billion for the 10 participating countries, when the Commission first put forward its plan in 2013.
The Commission had proposed the FTT for all EU countries in 2011. Given the opposition of a majority of member states, some of them decided to move forward two years later under the ‘enhanced cooperation mechanism’.
After years of negotiations, the agreement looks within reach and could come as early as in October, according to German finance minister Olaf Scholz.
But Italy and Spain disagreed with the formula to share the revenues, distributed according to the Gross National Income (GNI) of the national economies.
Under this formula, Spain would have been the big loser. While its expected revenues would have reached around €498 by applying the FTT directly on its jurisdiction, the mutualisation would have brought down the figure to €406 million (-18.5%), according to the estimates made by Paris and Berlin.
In a recent letter seen by EURACTIV, Scholz and his French counterpart, Bruno Le Maire, amended their original plan, put forward in January, by “clarifying the mutualisation approach”.
In the case of Italy, under the first plan the estimated revenues were €604 million, a 26.4% increase compared with the gains obtained if the tax was applied to its financial market.
In order to address Madrid’s concerns, Paris and Berlin put forward a reviewed formula to minimise the loses of the largest contributors. But at the same time, they insisted maintaining a “guaranteed minimum revenue” of €20 million to ensure that “smaller countries can cover fixed costs associated with establishing and maintaining infrastructure for the collection of an EU-wide FTT”, the Franco-German letter said.
Sources close to the discussion explained that guaranteeing a small amount of revenues was necessary to attract smaller member states and increase the number of participants in the enhanced cooperation mechanism.
To date, Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain form the group. In addition, Estonia has expressed its willingness to join.
While the discussions continue within the enhanced cooperation format, Le Maire and Scholz still hold some hopes of agreeing on an EU-wide FTT, given the “good reasons” behind it, they argued in their letter.
According to Commission estimates, Greece, Slovakia and Slovenia would require top-ups from other member states in order to reach the minimum income of €20 million.
In the case of Slovakia and Slovenia, the revenues generated would be close to zero.
France and Germany proposed to distribute the total sum required for the top-ups (around €50 million) between the participating countries whose revenues are expected to exceed €100 million (Belgium, France, Germany, Italy and Spain), according to their GNI.
As a result, under the new formula, Spain would cut its loses to obtain €491.52 million (-6.48% less), and Italy will gain €468.86 million (-9.14% less) compared with a direct implementation of the tax on its financial markets.
Germany will receive €1,224.93 million (-19.07%) and France €987.20 million (-12.80%), bearing the biggest loses.
“The advantage of this system would be that the remaining countries would contribute relatively little to the top-up payments,” the proposal reads.
But despite the small difference in the expected revenues, Spain remains unconvinced, an official of the Ministry of Economy.
Sources meanwhile, said that Spain has not proposed an alternative formula for the distribution.
The same sources said that Italy put forward an alternative mutualisation formula to overcome the stalemate. Italian officials however declined to share details about their proposal.
Once the FTT is in place in 2021, as France and Germany wants, the FTT revenues could be dedicated to the new budgetary instrument for the eurozone, expected to be up and running the same year.