EU ministers mull eurozone finance tax

Strong opposition from non-eurozone countries.

Finance ministers from the European Union have raised the possibility of introducing a financial transaction tax solely in the 17 countries of the eurozone.

The second day of their meeting in Wroclaw, Poland, was dominated by the issue of the levy, which has been given greater impetus since the finance ministers of France and Germany wrote to the European Commission in support of the idea on 9 September.

François Baroin and Wolfgang Schäuble re-stated their case today but were met with fierce opposition, particularly from finance ministers from outside the eurozone.

The EU has failed to convince the G20 group of the richest and emerging economies that a transaction tax should be introduced at a global level so the Commission is to publish a proposal for an EU-only scheme next month.

After today’s meeting Didier Reynders, Belgium’s finance minister, said that there was a possibility that the 17 members of the eurozone would go it alone.

“I’m sure that if it’s impossible at a worldwide level we need to organise it in the European Union, at least in the eurozone,” he said. “I’m sure that it’s possible to start with the 17.” Reynders added that he did not believe that a treaty change would be needed.

The UK government, which believes the tax would see the City of London lose its dominance as a centre of financial transactions, is against the plan.

Following today’s meeting, which was also attended by central bank governors, Anders Borg, the finance minister of Sweden, said that he too was opposed. Sweden introduced a tax on financial transaction in 1990s but scrapped it after investors moved business away from Sweden.

“Most of our derivative and bond trading went to London during the years that we had a transaction tax so if you don’t get a solution that is universal [on a global level] it is very likely to be detrimental for European financial markets,” he said.

“We cannot foresee that we would introduce such a tax. To my mind it would be very difficult for the 17 so I would not argue for that.”

Jacek Rostowski, Poland’s finance minister, who hosted the meeting, acknowledged that member states were “very much divided” on the issue.

However, this will not dissuade the Commission from making its proposal.

“There isn’t a common position,” said Michel Barnier, the European commissioner for the internal market, who also attended the meeting. “We don’t start the discussions thinking they’re not going to work out,” he said.

He said that a financial transaction tax was “technically simple, economically bearable, financially productive and fair”.

“We know it’s complicated and there are disagreements but that doesn’t mean [member states] can’t be convinced.

“My work is to convince and to build a consensus, even if that looks unlikely at the start.”