Ecofin Gives Go-Ahead to Financial Transactions Tax

Ecofin Gives Go-Ahead to Financial Transactions Tax

The European Council of Economic and Financial Affairs (Ecofin) authorized with a qualified majority EU member states to proceed with plans for a financial transactions tax introduction.

European Parliament gave its approval of a new tax on December 12, 2012. Now after approval from Ecofin the European Commission can present a proposal on plans for financial transactions tax and allow negotiations on that issue.

This is a first case of EU countries’ enhanced cooperation regarding taxation. Enhanced cooperation is a procedure enabling a group of EU member states (minimum of nine) to launch coordinated action on a proposal in the event that a consensus is not possible among all twenty-seven EU member states.

Last year eleven EU member states (Germany, France, Austria, Belgium, Spain, Estonia, Greece, Italy, Portugal, Slovakia and Slovenia) requested the use of enhanced cooperation to forward the financial transactions tax. According to the German finance ministry, the introduction of that tax in eleven EU member states is a first key step toward the introduction of a global financial transactions tax.

The aim of the tax is to ensure a fair and equitable contribution from the financial sector to the costs of the banking crisis. The future financial transactions tax must include all possible financial instruments, have a wide base and a low tax rate. The levy should not be limited to financial transactions carried out on the stock markets and regulated trading platforms but should also apply to trading carried out outside of this sphere

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