France and Germany will outline a joint proposal today for a financial transaction tax to be implemented in the EU.
French Finance Minister Bruno Le Maire and German Finance Minister Olaf Scholz will present a joint position paper on the proposed transaction tax to a meeting of eurozone finance ministers in Brussels today. The proposal is based on a system already in place in France, which taxes transactions involving domestically issued shares in companies with a market capitalisation of more than €1 billion.
The transaction tax will form “an important element” of strengthening the EU’s economy, the paper says, noting that the revenue generated by the tax “could contribute to a eurozone budget”, with participating Member States able to use the revenue to offset their contributions to the budget. If the proposal is accepted, it will form part of the EU’s financial framework agreement for the period spanning 2021 to 2027, due to be voted on in 2020.
French representatives are in favour of allocating future revenues from an EU-wide transaction tax to the eurozone budget only; while German representatives advocate diverting some funds to the wider EU budget.
Le Maire and Scholz intend to discuss the terms of the proposal with representatives from Belgium, Greece, Italy, Portugal, Austria, Slovenia and Slovakia, the Member States to which the transaction tax would primarily apply; and are working on a plan to calculate offsets for countries which will be unlikely to generate much or any revenue from the tax, because their companies are too small for the system to apply. The ministers also have yet to ascertain how the tax will apply to France, Belgium, Italy and Greece, all of which already have variations on a transaction tax system in place.
The European Commission first proposed an EU-wide financial transaction tax, which would see transactions on shares and bonds taxed at 0.1 per cent and derivative products at 0.01 per cent, in 2011. As Member States were unable to reach a consensus on the implementation of the scheme, France, Germany, Austria, Belgium, Spain, Greece, Italy, Portugal, Slovakia, Slovenia and Estonia established an “enhanced cooperation” mechanism to continue work on the financial transaction tax project; although Estonia later left the project.