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Tuesday, May 06, 2014

Swedish and Dutch patience running out over proposed FTT?

EU finance ministers met today, with the financial transaction tax (FTT) once again topping the agenda.

They were presented with a new proposal or brief under which the 11 countries pursuing the FTT under enhanced cooperation could move forward. The plan involved significantly amended terms and (again) suffered from a significant lack of detail:
  • The scope will be “limited” to “shares and some derivatives”, according to German Finance Minister Wolfgang Schäuble – suggesting bond markets and probably repo markets will be exempt. The level of the tax on shares could be cut from 0.1% to 0.01%.
  • This will form part of a “step by step approach”, suggesting the tax will be expanded in the future.
  • Non-participating countries will be fully informed on all future FTT discussions.
  • The FTT will not be introduced until January 2016.
  • It is unclear whether Slovenia will participate in the FTT anymore, given that it did not sign the recent statement on the issue due to domestic problems and uncertainty around its government.
  • Reuters reports that the revenue from the adjusted tax is expected to be about a tenth of the original forecasts – putting it at €3.5bn.
Those outside the proposed FTT zone showed quite significant hostility to the process of enhanced cooperation (as it has been conducted in this case) and continued to warn of legal action. UK Chancellor George Osborne said:
“The FTT that people have talked about is not a tax on bankers, it’s a tax on jobs, investment and people’s pensions.”

“Here we have a situation where 11 member states are working up their proposals largely in secret, I do not know how involved the Commission is in this or not. Then as we start our discussions here we get a piece of paper handed to us all by the 11 member states saying this is what we have agreed.”

“We will wait to see the final text of the proposal, but we will not hesitate to [legally] challenge an FTT which has extraterritorial impacts, that damages other member states, including the UK, or that damages the single market.”
Osborne was notably annoyed by the fact that the one page sheet on the new proposal was presented to the other EU ministers only five minutes before the meeting. His position was strongly backed by Swedish Finance Minister Anders Borg, who said:
“Even if this is a rather narrow proposal, there is a clear risk of a slippery slope toward a broader proposal with much more harmful effects on growth, and particularly on the capital markets.”

“The burden of proof is on the countries that want to enter the enhanced cooperation to prove, beyond a reasonable doubt, that those not participating are not harmed by this measure.”

“We did not support the U.K. when they started this legal case; we are much closer to doing that, because the process has not been satisfactory during these last few months…I’m very disappointed in the process.”
While even Eurogroup Chief and Dutch Finance Minister Jeroen Dijsselbloem warned:
“The impression I get is that, you [meaning the 11 FTT countries] have found a very, very small common ground, which is still very vague on the basis for the tax, when it will actually take place, on what products etc. but you have decided we must come out with something before the elections. That’s fine, but please also respect that we’d like to know a little more.”

“I don’t think that there is any basis at the moment for the Dutch government to consider joining, certainly not on what we have here… I’m a little disappointed in the way the process is going at the moment.”
All in all then, while there is talk of progress on the FTT, its scope has been slashed as expected, while the time line has been pushed into the long(er) grass. The process under enhanced cooperation has taken a public hammering, while it remains clear that those involved are struggling to find any clear agreement.

However, the fact that the Swedes and Dutch have expressed their anger so openly highlights that this will continue to be politically fraught. In addition, that the 11 countries seemingly want to reserve the right to expand the FTT in future, means this still has a way to run and future legal challenges are a genuine possibility.


Anonymous said...

And here lies the reason why the EU is unworkable and is wrong wrong wrong. If it wasn't so serious for the UK's interests, it would be laughable.

Get us out. We didn't vote for any of it and we don't want it!!

Bring on the Euro elections.

DeeDee99 said...

What we have here is a small group of foreign politicians and kommissars seeking to impose a tax on another country, which will damage its economy and the interests of its people.

The Americans fought their war of independence on the principle of "no taxation without representation."

We are governed by a bunch of cowardly quislings who insist that we stay within a corrupt organisation, which is actively working to harm our country.

We need to get out of the EU.

Jesper said...

The FTT is yet another example of the one-way street of EU-level legislation.
If the FTT ever comes live then none of the participating countries can ever withdraw from the FTT.
A contrast against the FTT would be able to be increased in scope against the wishes of a participating country.

Anonymous said...

"Enhanced cooperation"

Read the right to bully and enforce undemocratic laws on countries against their national interest - and oddly enough the interests of Europe as a whole.

I despise what the EU has become and cannot wait for the European elections on the 22nd May. I do not EVER want to be ruled from Brussels.

What on earth have our politicians done to us?

Free trade. No sovereignty.


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Average Englishman said...

The only surprise to me here is that the Swedes and Dutch have started to 'wise up'.

The whole set up is obviously rotten and undemocratic, with decisions being made behind closed doors by some parties that will effect everyone in the EU and outside, exporting jobs and investment from the UK in particular to Asia, not to mention promises of more to come.

Ever closer union = ever more EUSSR = ever more dictatorship = ever less democracy. All very normal for our masters in Brussels.

Still, I like to be positive and I take heart from the look on George Osborne's face, which I am sure is mirrored by many others with influence in the City of London. Still love the EU guys? Come on; see the light and let's get our country back.

GEOFF said...



christina speight said...

There's no use people relying on the euro-elections or the ECJ to solve this mess. The way the EU is constructed both are useless tools. The parliament can be bypassed and the Court is europhile to its core.

OUT is only way.

Denis Cooper said...

The EU's Court of Justice is the last place anyone should expect to get justice if what they want goes against "ever closer union", and it not only pointless to go there but also a serious mistake to recognise its authority.

Article 50 now.