Finance tax ‘within reach’ but political will needed, EU’s Moscovici says

26 January 2017
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An agreement on a common financial transactions tax (FTT) is “within reach” among the 10 eurozone countries willing to adopt it, the European Union’s economics commissioner said on Thursday.

The proposed tax – 0.1 percent for stocks and 0.01 percent for derivatives – was put forward by Germany and France in 2012. It is considered a political symbol as much as an effort to correct the excesses blamed for the 2007-08 financial crisis, the world’s worst for decades.

But the project has been stuck for years, and most of the 28 EU countries have pulled out of the plan. Later on Thursday, the finance ministers of the 10 remaining nations that support the tax will meet in Brussels in the sidelines of a monthly gathering of euro zone finance ministers, but no breakthrough is expected.

“A deal is within reach, if we only consider technical and legal issues, but what is needed is political will,” economics commissioner Pierre Moscovici told a conference before the finance ministers’ meetings.

The 10 countries still willing to adopt the tax are Germany, France, Italy, Austria, Belgium, Greece, Portugal, Slovakia, Slovenia and Spain. The tax is already applied domestically in some EU countries.

Despite formal statements of support for the project, officials privately recognize that there is little momentum to move forward, especially before German elections in September. That vote could end the coalition of conservatives and social democrats running the country. The FTT is mainly backed by the social democrats.

Britain’s decision to leave the EU may also lower the appeal of a common tax, as euro zone countries scramble to lure British banks and financial firms away from the City of London after Brexit.

Shares, bonds and derivatives transactions would be taxed under the project in the participating countries, a move that may discourage banks from moving sizeable parts of their operations.

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