Estonia pulled out of a proposed agreement on the introduction of a financial transactions tax (FTT) across ten Eurozone countries on December 8, claiming the goalposts have moved. Ten other countries, including Slovakia and Slovenia, agreed on the core priciniples, and will continue negotiations.
The torturous talks on a levy on the trading of financial assets have been ongoing since 2011. Originally, Brussels wanted the tax applied across the EU, but objections - led by the UK - had whittled the group down to just 11 survivors.
Following talks at a meeting of finance ministers, Germany, France, Italy, Austria, Belgium, Greece, Portugal, Slovakia, Slovenia and Spain reported progress. The ten said in a statement that all transactions of shares of isuers from within the group will be taxed. They expect a political agreement later this month.
Estonia, however, objected, noting most of the shares traded by its financial institutions are issued outside the participating group. That would see any additional revenue fall into insignificance, while risking the loss of traders to other countries that do not support the levy.
"Starting today Estonia is out [of the group for enhanced cooperation], 10 countries will go on," Finance Minister Sven Sester said on social media. He complained that the plan has moved away from the original idea.
Other than levying the tax on shares trading, the group also agreed on taxation of derivatives transactions, as long as it does not impact the cost of sovereign borrowing. The group also decided to assess the impact of the tax on the real economy and pension schemes as well as the financial viability of the tax for each country, according to Reuters. With regard to other aspects of FTT, the countries gave themselves until end of June 2016 to iron out differences.
The original proposal on FTT was tabled by the European Commission in 2011 and sought a tax rate of 0.1% on transactions on shares and bonds, and 0.01% on derivative products. Aimed at stemming the risks of speculative trading and raising cash to pay the costs of bank bailouts, the FTT was originally planned to apply to all transactions involving any party based in the EU.
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