GERMANY’S FINANCE minister Wolfgang Schäuble has said he intends to press for the introduction of a controversial financial transaction tax in the European Union next year. This is in spite of objections from Britain and reservations expressed by Ireland about how it might disadvantage some financial companies based here.
Mr Schäuble said that if the tax cannot be introduced in the EU as a whole then it should happen at least in the euro zone.
"In the EU, we've agreed to explore the chances of a financial transaction tax in the first months of the new year," he said in an interview with Bild am Sonntag, published on Sunday. "If the hurdles are too high then Germany and France will push for introducing the tax only in the euro zone."
Britain has objected to the tax on the basis that it could harm London as a global financial centre. It would only support a global levy.
Earlier this month, Minister for Finance Michael Noonan said Ireland was prepared to discuss such a tax but he warned the country could be disadvantaged if such a levy was applied in Dublin but not in London. The Department of Finance declined to comment yesterday on Mr Schäuble’s interview but said Mr Noonan’s position had not changed.
Ireland is a major centre for funds administration in Europe and Mr Noonan does not want to put these jobs at risk. His preference is that such a tax should be introduced globally, or throughout the 27-member state EU and not just the 17 euro zone members.
Mr Schäuble said he wanted to see the tax introduced soon.
“I don’t want to wait until such a tax is introduced worldwide. Otherwise, we would risk not only the stability of our financial markets . . . but we would also be endangering the legitimacy in the public eye for the entire system.
“That’s why I’m fighting with such determination for a financial transaction tax. It might not be able to stop the ludicrous developments in financial markets but it would at least brake them a bit.”
Mr Schäuble said he wanted the tax to slow down the pace of financial transactions and possibly make some speculative business unprofitable.
“The markets are a bit too preoccupied with themselves these days rather than supporting the real economy,” he said. “We’ve got to decelerate the pace of transactions.”
Under the plan, stock and bond trades would be taxed at the rate of 0.1 per cent, with derivatives taxed at 0.01 per cent.
The tax would be imposed on all transactions in financial instruments between financial firms when at least one party to the trade is based in the bloc.
Mr Schäuble also told Bild am SonntagEurope's sovereign debt crisis would not trigger a financial market crash in 2012.
“I consider the situation to be controllable,” he said.
“There will certainly be some surprises and bouts of excitement along the way but we’re capable of managing the situation. I’d advise everyone to have a bit more serenity about it all.”
– (Additional reporting Reuters)