Home > Uncategorized > Germany says euro zone transaction tax won’t work

Germany says euro zone transaction tax won’t work

Finance Minister Wolfgang Schaeuble conceded for the first time on Monday that efforts to get a financial transaction tax implemented in the euro zone were doomed.

“We just can’t get it done,” Schaeuble said in Berlin, referring to efforts led by Germany and France to introduce a levy to replenish government coffers hit by the financial crisis.
He said Britain and several other European Union countries would not support the measure, popularly known as the “Robin Hood Tax”, adding he would only introduce such a tax on a pan-EU basis.
Schaeuble nevertheless was hopeful some countries in the European Union would begin implementing an enhanced stamp duty, including derivatives, this year but admitted this would not be possible in the broader bloc.
“But we just won’t get it done even in the euro zone,” he said, adding that there are some euro zone countries rejecting it. “So as a result we’ll try something else.”
Last week the Netherlands rejected the proposed financial transaction tax, dealing a heavy blow to the Franco-German bid for the levy.
Earlier this month, Germany’s push to win backers for the financial transaction tax met resistance among EU ministers who were divided on the question of how to collect more money from banks blamed for the financial crisis.
Having failed to win support for the measure from the United States and other members of the G20 leading economies, France and Germany then made a drive to end more than two years of debate on the issue in Europe.
The basis for the discussion is a European Commission blueprint for a tax that could raise up to 57 billion euros ($75 billion), with much of it coming from London, the region’s biggest trading centre.
Britain has said it will stop any such pan-European tax, fearing it would damage London’s financial hub. Mark Hoban, a junior treasury minister, reiterated this opposition on Tuesday.
Other countries, which have been supportive of the idea, also expressed reservations about implementing a tax.
Political leaders in Germany, which has national elections next year, and France, where two rounds of presidential elections take place in April and May, believe the tax will please voters who blame banks for the economic crash.
Chancellor Angela Merkel has repeatedly signaled she wants a result by March. France is set to introduce its own tax, which resembles Britain’s stamp duty on share trading, in coming months.
Last year, the European Commission proposed a plan to tax stock, bond and derivatives trades from 2014 across the EU. It would work in a similar way to Britain’s stamp duty of 0.5 percent on share trades, which raised almost 3 billion pounds in the financial year to April 2011.
Even if Britain opted out, trades carried out in London could be affected.

Any pan-European plan needs the backing of all 27 member states to become law, although a smaller scheme is possible.

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