EU Seeks Transaction Tax as 11 States Meet in Bid to Choose Path
The 11 European nations seeking a financial-transactions tax will meet Thursday in Luxembourg in a bid to decide how to design the measure, according to European Union officials.
Participating states are wrangling over which trades to tax and who should collect revenue, according to planning documents obtained by Bloomberg News. Finance ministers and deputies are next slated to meet in Luxembourg with EU Economic and Tax Commissioner Pierre Moscovici before scheduled meetings of all 19 euro-area finance ministers.
At a May 11 meeting, the participating nations considered three options for how to collect the tax, according to a document prepared for that meeting. One option would be a broad tax based on a financial firm’s country of residence, a second would be similar but more narrowly focused, and a third option would be based on where trades are issued.
In May, ministers also considered how broadly the tax should cover derivatives trades, alongside questions of what exemptions might be permitted. In subsequent technical meetings, they considered a list of 17 “building blocks” that might be part of a final tax plan.
Tax collection options were discussed in the technical meetings, based on a study by consulting firm EY, according to a document prepared for those meetings. Under one option, financial firms would report and collect taxes due on an individual basis. Another option would be more central tax collection, carried out by a central counterparty or clearinghouse or other utility.
Revenue Discord
Transaction-tax plans have bogged down as countries disagree about how much revenue the tax should raise. France has called for a phased-in approach that only covers a few types of trades at the start, while Austria and others have said the tax needs to collect substantial revenue to be worthwhile.
Backers of the tax plan say the EU needs it to raise revenue needed for other policy goals.
“Ensuring the financial sector pays its fair share of tax cannot happen due to the current scope of the financial transactions tax,” said Javier Pereira, policy adviser to the non-profit group Oxfam, which has been following the tax talks closely.
The 11 nations that have volunteered to work on the joint transaction-tax plan are: Germany, France, Spain, Italy, Belgium, Austria, Portugal, Greece, Estonia, Slovakia and Slovenia.
