Nine of the 17 member states of the euro area have sent a formal request to the Danish EU presidency to put the Commission proposal for an EU-wide financial transaction tax on the fast track.
Despite the clear opposition of some member states, including Malta and the Netherlands in the Eurozone and others like the UK, Sweden and Denmark outside, the nine member states, which include Germany, France and Italy, want a first reading of the new tax law by the end of this June.
Sources close to the presidency said this “unusual request” to fast-track a Commission proposal could indicate that the nine countries would still like to move on with this tax even if not all the member states agreed.
“Knowing that there will never be consensus on the current text, with Malta and the Netherlands clearly opposed to this proposal, this initiative signals that these eurozone member states are even prepared to launch this legislation alone under the enhanced cooperation mechanism,” the sources said.
Enhanced cooperation is a procedure whereby a minimum of nine are allowed to establish advanced cooperation in an area within but without the other members being involved.
This mechanism is already being used in the fields of divorce law and patents. In both cases Malta decided to join.
In their letter, the finance ministers of Germany, France, Italy, Spain, Belgium, Austria, Portugal, Finland and Greece urged the Danish EU Council presidency to “accelerate” work on introducing a financial transaction tax.
“We support fully in principle the draft directive presented by the Commission in September 2011 and express our strong conviction that a financial transaction tax is necessary at EU level both to ensure that the financial sector makes a fair contribution to the cost of the financial crisis and to improve financial market regulation”, the letter states.
The finance ministers said that their citizens shared their conviction, “which justifies the Council’s work being speeded up so as to complete a first reading of the draft directive during the first half of 2012”.
In an immediate cautious reaction, the Danish EU presidency said it welcomed the initiative but simply announced that it “is looking into how to respond to this request at technical level”.
Like Malta, Denmark fears that an FTT introduced only at an EU level would encourage financial services companies and banks to move to other jurisdictions to avoid paying the tax.
The Commission is proposing that EU member states will start imposing a tax of 0.1 per cent on trading in shares and bonds and 0.01 per cent on derivatives transactions.