Eleven eurozone countries won approval yesterday for a tax on financial transactions aimed at shifting more responsibility for the region’s crisis onto banks despite fears it could drive business out of Europe.
European Union finance ministers gave their approval at a meeting in Brussels, allowing the states — Germany and France plus Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia — to pursue the contested scheme.
The levy, based on an idea proposed by US economist James Tobin more than 40 years ago but little considered since, is symbolically important in showing that politicians, who have fumbled their way through five years of financial crisis, are getting to grips with the banks often blamed for causing it.
“This is a major milestone in tax history,” Algirdas Semeta, the European commissioner in charge of tax policy, told reporters, saying the levy could be imposed from January next year if governments agree on its design quickly. Under EU rules, a minimum of nine countries can co-operate on legislation using a process called enhanced co-operation as long as a majority of the EU’s 27 countries give their permission.
Britain, which has its own duty on the trading of shares, registered its protest by abstaining in the vote, along with Luxembourg, the Czech Republic and Malta, EU officials said. Following yesterday’s decision, Semeta said the European Commission would likely put forward a blueprint for the tax in February. Other EU countries could still join the scheme.
Even if Britain and others are out, however, they could still be affected, which is a major concern for London, Europe’s biggest financial centre. If either the buyer or seller is based in one of the countries imposing the tax, the levy can be imposed regardless of where the transaction takes place.
Although critics say such a tax cannot work properly unless applied worldwide or at least Europe-wide, some countries are already banking on the extra income from next year, which one EU official said could be as much as €35bn annually. Economy Minister Vittorio Grilli said Italy expects revenues of €1bn a year at the national level, while French finance ministry official Benoit Hamon said Paris was among those keen to have the levy in place quickly and hoped other countries would eventually join up. The Netherlands has expressed an interest in joining the 11, German and French officials said, and non-eurozone countries have also registered interest in signing up.
Powerful lobby group AFME, which represents some of the world’s largest banks, says the tax will undermine economic growth and the jobs market at a time when Europe is struggling with record unemployment.
Nicolas Veron, a financial market expert at Brussels-based think-tank Bruegel, also believes the scheme, which is likely to see stock and bond trades taxed at a rate of 0.1% and derivatives trades at 0.01%, is misguided.
Source: Caye Global News, Gulf Times
The Energy Books by Dr. Theodore, now available on these stores:
THE SECRET WORLD OF ENERGY – Oil, Gas & Petrochemicals…
Oil – Gas Exploration & Drilling…