Ecofin to push taxing of financial transactions

Minister for Finance Michael Noonan has said Ireland could be the “honest broker” in discussions about the financial transactions tax during its presidency of the European Council, despite opting out of the proposal.

He was speaking after chairing a meeting of finance ministers in Brussels at which 11 countries decided to proceed with the tax. The proposal is expected to see the introduction of a new tax of 0.1 per cent of the value of any trade in shares or bonds and 0.01 per cent of any financial derivative contract.

Ireland is one of 16 countries, which do not support it, but the other member states are proceeding with the tax on the grounds of “enhanced co-operation”, a procedure where at least nine members states can implement measures if agreement from all 27 member states is not reached.

“Today was about process, it was about moving the financial transactions tax forward, through enhanced co-operation, but it wasn’t about the content or the substance of any financial transaction tax that may come in,” Mr Noonan said.

The commission is due to bring forward a proposal as early as next month.

Member states which don’t want to participate in the ultimate financial transaction tax will be fully involved,” Mr Noonan added, “and will participate fully in the discussions, so it’s still a process which will involve the 27 members.”

“Milestone”

EU taxation commissioner Algirdas Šemeta described the agreement as a “milestone” for EU tax policy, because “it paves the way for more ambitious member states to progress on a tax file” even without unanimity.

Mr Šemeta urged any state that was considering the tax to “climb on board”, because “there is everything to gain from being part of an EU approach to the financial transactions tax”.

Pointing to “considerable” new tax revenues, Mr Šemeta said this could be used for growth-friendly investment and to support wider policy commitments, such as development. Some believe that the tax could raise up to €20 billion a year, although estimates vary.

“Taxation will become fairer, as the financial sector makes a proper contribution to public finances and the costs of the crisis,” he said.