Ministers consider alternatives to financial tax

Little chance of consensus on an EU-wide tax on share, bonds and derivative trading.

The European Union’s finance ministers are exploring a slimmed-down
approach to the European Commission’s proposal for a wide-ranging tax on financial transactions, and may instead opt for a form of stamp duty on share trades.

The idea, discussed at a meeting of finance ministers on Tuesday (13 March), emerged as it became evident that consensus for an EU-wide tax on share, bonds and derivative trading remains unattainable.

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The UK’s vigorous opposition to a financial-transaction tax was supported by the finance ministers of Luxembourg, the Netherlands and Sweden.

Margrethe Vestager, the finance minister of Denmark, which holds the rotating presidency of the EU’s Council of Ministers, said that officials would draw up “alternatives” to the Commission’s original proposal, which could be discussed when finance ministers meet on either 15 May or 29 June.

Lack of consensus

Wolfgang Schäuble, the finance minister of Germany, which supports the tax, said that there would be an obligation “to concentrate on alternatives” if there remained no consensus.

Schäuble said that alternatives could include a stamp duty on shares or a tax that could be levied on traders’ bonuses or profits. Maria Fekter, Austria’s finance minister, called for an end to the VAT exemption for financial services.

Unanimity would be required to introduce a financial-transaction tax across the whole EU. However, if a minimum of nine member states agree, they could proceed  under the process of ‘enhanced co-operation’. This has looked the most likely option since nine finance ministers from the eurozone sent a letter to the Commission on 9 February urging fast-track treatment for legislation to introduce the tax.