The finance ministers of France and Austria have written a joint letter urging nine other European countries to re-open talks over a European financial transaction tax (FTT), said a Reuters report.
The letter proposes that the tax be applied to a wide range of transactions but at low rates from next year. The tax – commonly called the Tobin tax after economist James Tobin who first proposed the idea in the 1970s – would impose a 0.1 percent levy on most equity and debt transactions originating in Europe.
“We suggest resuming the work on a different footing to the approach that led to the negotiations hitting a wall in 2014,” France's Michel Sapin and Austria's Hans-Joerg Schelling wrote in the letter.
The tax was due to be enforced in 11 countries through “enhanced cooperation” – a term describing nine or more EU member states deciding to move ahead with an initiative proposed by the Commission once it proves too difficult to reach unanimous agreement in all member states. The 11 countries participating are: France, Germany, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, Italy, Spain and Estonia.
Yet talks among the 11 nations floundered over disagreements on the minutiae of the rules.
Strong lobbying efforts have also caused many in the EU to be apprehensive about the tax. As only 11 of the 28 EU members signed on to the controversial tax, critics including the European Council’s legal team, have said it would be “discriminatory and likely to lead to distortion of competition to the detriment of non-participating member states.”
“They're not just taxing their own – they're taxing investors and financial institutions across the EU and beyond,” Clifford Chance tax partner, Dan Neidle, previously told pfm. “There is a serious question whether this kind of extra-territorial taxation is consistent with EU treaties.”
The UK government, for instance, has been a long-standing opponent to the tax and attempted to eliminate the FTT arguing in the European Courts that it would leave the UK at a disadvantage, but the appeal was rejected.