The European Financial Transaction Tax

Dr Jonathan Pisani | Published on 25 Jun 2012

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A European financial transaction tax

European enhanced co-operation, which attempted to impose a financial transaction tax (FTT) across EU member states, faced its final hurdle last Friday.  At the Eurogroup meeting in Luxembourg on 21 June 2012, the finance ministers from the European Union’s member states did not unanimously agree to implement a financial transaction tax throughout the EU.
 
As a result the FTT is now, at least for the moment, on hold.  This paves the way for a similar levy to be introduced by those member states in favour of the tax amongst themselves.  However, it was reported that Hubert Legal, the Council of ministers’ legal service, pointed out that a separate tax of this nature would first need to be proposed by the commission and later approved by a majority of the 27 EU member states.  

European cooperation

The FTT was proposed in the wake of the Irish and Greek sovereign debt crises.  If implemented it would have levied a tax on broadly the trade of all financial securities.  The revenue generated could have, at least in part, been used to repair ailing European economies following the economic turmoil of late.
 
Nevertheless, pro-European sentiment remains at a high.  At a separate meeting in Rome on the same day, Germany, France, Italy and Spain outlined plans to push for a €130bn growth package and Italian PM Mario Monti was reported as exclaiming that “the euro is here to stay, and we all mean it”.  An EU summit on the euro crisis next week is expected to yield a similar outcome.  
 

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