AN EU Commission proposal for a common European tax on financial transactions ran into fresh trouble as divisions over the plan resurfaced between European finance ministers.
At a two-day meeting in Brussels, which was overshadowed by the escalating political crisis in Italy, questions were also raised about the drive to recapitalise the weakened euro zone banks.
The greatest divisions were seen when ministers held their first formal discussion on the commission’s plan to tax financial transactions.
“There were very diverse views on this. The discussion was frank and open,” said Polish minister Jacek Rostowski, who chaired the meeting as part of his country’s rotating presidency of the EU.
Minister for Finance Michael Noonan said Ireland favoured the introduction of such a tax but argued against moves to surmount British and Swedish opposition by developing a euro zone only tax.
His preference was for a tax at the level of the 27 EU member states, he said. “Ireland would find it very difficult and it would be very onerous on our financial services industry if there were a financial transactions tax in Dublin and no such tax in London. That would have a big impact on us,” he told reporters.
“We think there should be a tax on the financial sector, after all countries all over Europe including Ireland have paid a lot of taxpayers’ money to support the banking system. There must be a day when it’s payback time for the taxpayer.”
Countries like Germany, France, Austria, Spain, Belgium and Finland are in favour of a transaction tax but Bulgaria and the Czech Republic joined Britain and Sweden in their opposition to the plan. British chancellor George Osborne said the initiative was a non-starter and should be withdrawn as there was “nothing close” to unanimity on the question.
Ministers left Brussels yesterday without achieving any breakthrough on sensitive dossiers related to Europe’s new “grand bargain” plan to settle the debt crisis.
Significant technical difficulties are still to be overcome as the EU authorities advance plans to expand the lending power of their bailout fund.
In light of this and the uncertainty over the fate of the Greek bailout, Spain and Italy are understood to have expressed reservations at the Brussels meeting to push ahead with the plan.
The two countries, whose banks have been weakened by the debt crisis, are understood to have argued that the initiative to boost the banks should not go ahead without clarity over the other elements of Europe’s “firewall” against the crisis.
The euro zone ministers are due to meet again on November 29th but their president, Luxembourg prime minister Jean-Claude Juncker, suggested a further meeting may be scheduled in December to tie up the loose ends related to the expansion of the bailout fund.
