State will not support UK challenge to EU financial transaction tax

The Republic will not support a fresh legal challenge by the United Kingdom to the European Union's proposed financial transactions tax, Minister for Finance Michael Noonan said yesterday, as 10 EU countries preliminarily agreed to introduce a new tax on share transactions by 2016 and civil groups in Ireland condemned Ireland for not signing up to the measure.

Mr Noonan, was speaking after Sweden said it would potentially support the UK if it brought a second case to the European Court of Justice (ECJ) over the plan. Last week, the court rejected the UK’s action against the proposed measure, arguing it was too soon to rule on the legality of the move.

But speaking at the Ecofin meeting of EU finance ministers in Brussels yesterday, British chancellor of the exchequer George Osborne said the UK would consider further action.

“The ECJ judgment makes it clear that the UK or any other state can challenge the final proposal if it is harmful to non-participating member states or to the single market . . . If it does impact on other European economies, we and other member states are entitled to challenge that,” he said.

Speaking after yesterday’s meeting, Mr Noonan said the Republic was not concerned about the effect of a transaction tax would have on Ireland.

"We don't have the concerns [the UK is] talking about, the spillover effects into the City of London and so on. We don't think it's an issue that impacts on Ireland. We are not going down any legal route but we are going to scrutinise all the details of the proposal."

Criticism
The Irish Congress of Trade Unions, the National Women's Council and Impact trade union were among the civil groups that yesterday criticised Ireland for not signing up to the tax.

Various proposals for an EU-wide tax on share and derivative transactions have been mooted for decades. The current incarnation of the “Tobin tax” was tabled by the European Commission three years ago but was rejected by a majority of countries including Ireland. Last year, under the Irish presidency of the Council of the European Union, 11 member states decided to press ahead with the measure under the “enhanced co-operation” procedure that allows countries to proceed with matters of common interest if the proposal has the support of nine member states.

But even within the original 11 supporting member states, divisions have intensified over recent months. Yesterday, the group of countries, which include France and Germany, agreed to apply a tax to shares but stopped short of extending the tax’s remit to other derivatives. The levy could be as low as 0.01 per cent.

Final agreement still has to be reached, with Slovenia, which is facing an election following the resignation of the Slovenian prime minister, raising concerns about the proposal.