The European Commission has recast its lobby for the introduction of an EU-wide financial transaction tax.
Taking the cue from the two biggest eurozone economies, Germany and France, the president of the European Commission, Josè Manuel Barroso yesterday announced that, later this month, the Commission should be in a position of making a final proposal on the introduction of a tax on all financial transactions taking place in the EU.
Addressing the media in Brussels following a two-day seminar for European commissioners after the summer break, Mr Barroso said the proposal would be pushed during a meeting of the 20 strongest global economies, the G20, to be held in Cannes, France, in the beginning of November.
Mr Barroso said the money raised through the proposed tax could also be used to finance the next seven-year EU Budget, covering 2014 to 2020.
Malta, which has a thriving financial services industry, is opposed to the introduction of the tax in the EU, arguing that restricting it to Europe would damage the territory’s competitiveness in respect to states that do not have it.
Malta’s argument is shared by the UK, which is home to the largest financial centre in Europe. However, many other member states agree with the tax as proposed.
The green-light to this controversial proposal will need unanimous agreement, which at this point in time looks impossible to achieve, particularly due to the UK’s opposition. The Commission is raising the long-standing issue ahead of the horse-trading that takes place among member states during the negotiations on the seven-year Budget.
The tax had been long in coming and many member states agreed with it, an EU official said yesterday. “The Commission’s intention is to introduce the FTT on an EU-wide basis first in order to act as a stimulus for other jurisdictions. It will also help to hinder speculation on the eurozone’s sovereign debt and will have limited economic impact if set at a low enough rate,” he said.
The official however admitted that a compromise would not be easy on it. In its proposals for the next Budget, published last June, the Commission is also suggesting the introduction of an EU-wide VAT. This will mean that a percentage of VAT proceeds from all member states will be passed to the EU’s coffers. Malta has already said that it also opposes this proposal because it considers taxation as a national issue and outside the EU’s remit.
The stand of member states on these proposals is expected to become clearer next month during a high-level conference in Brussels.