Germany launches new plan for EU financial transaction tax

Berlin, GermanyUpdated: Dec 10, 2019, 07:04 PM IST
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File photo: German Chancellor Olaf Scholz.  Photograph:(Reuters)

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Germany estimates that this form of FTT would bring in around 1.5 billion euros of tax revenue a year

Berlin on Tuesday said it had sent proposals for a new European financial transactions tax (FTT) to nine member state capitals, as Germany hopes for a rapid conclusion to the drawn-out project.

Finance minister Olaf Scholz on Monday offered a "final proposition" to hit trades in shares of companies worth more than one billion euros ($1.1 billion) with a 0.2-percent levy, his ministry said.

Ten countries Germany, France, Belgium, Italy, Spain, Portugal, Greece, Austria, Slovakia and Slovenia have agreed to close cooperation on FTT plans.

But talks have been going on for years and had appeared stalled.

"We are now in a position to reach an agreement under enhanced cooperation for the first time since 2011," Scholz wrote in a letter to his fellow finance ministers.

Berlin's planned tax would not be raised on trades in bonds and financial derivatives.

Even in share trading, certain operations could be exempt, including new flotations (IPOs) or pension funds' stock market activities.

In an initial reaction, Austria's finance ministry complained Scholz had opted for a "minimal" range of transactions to tax and left bugbears like high-frequency trading untaxed.

Germany estimates that this form of FTT would bring in around 1.5 billion euros of tax revenue a year.

Much of the sum has already been earmarked to pay for an increase in pensions for the worst-off old people, agreed in principle by Chancellor Angela Merkel's coalition government last month.

Dating back to the 1970s, the FTT concept was reinvigorated in 2011 as the financial crisis was at its worst in the EU.

France, Italy, and Britain already tax some financial transactions.

But even within Germany, center-left SPD party politician Scholz's version has already come in for criticism from elsewhere on the political spectrum, including from the ranks of his coalition partners in Merkel's center-right CDU.

"The proposals are an attack on small German investors," CDU MP Christoph Ploss told the Funke newspaper group.

Greens MEP Sven Giegold also told Funke that the latest plan was a "farce, not a real financial transactions tax" that would be paid only by "small investors".