FTT deemed a 'coalition of the willing' project

20.03.2012 - 17:11

Taxation Commissioner Algirdas Šemeta addressed the European Parliament's Economic and Monetary Affairs Committee on 20 March, strongly advocating in favour of the financial transaction tax (FTT).

Šemeta said that the model proposed by the European Commission was the only viable option and warned member states against any "B or C plans". The commissioner and MEPs also discussed the issue, which emerged last year when several EU countries started negotiating tax agreements with Switzerland.

Greek Socialist deputy Anni Podimata, the Parliament's rapporteur on the proposed FTT legislation, praised the commissioner for taking a stand against certain member states and defending the taxation proposed by the Commission against other models for the finance sector.

Podimata asked why the Commission had not yet published its impact assessment, which should show that FTT would have a beneficial effect on economic growth. Greens MEP Emily Turunien warned that, by not publishing the impact study, the finance lobby, which has compared the FTT to a "neutron bomb", would win the battle against the FTT.

Socialists were very vocal during summer 2011 against Šemeta in accusing him of blocking the FTT, and even conducted an online campaign depicting Lithuanian commissioner as one to blame for the lack of a tax on financial transactions. Šemeta himself was strongly advocating alternative solutions, which he is now as vigorously urging against.

Šemeta insisted that EU countries should not deviate substantially from the Commission's proposals and pledged to publish the impact study before the next council of the EU finance minsters mid-May. He stressed that the finance lobby failed to provide figures to substantiate their claims of damaging impact of an FTT. Reiterating his preference for a deal of all 27 countries, Šemeta did not exclude a possibility of FTT legislation applying to only some member states.

The likelihood of a common EU-wide FTT was further reduced after German Finance Minister Wolfgang Schäuble downplayed such a possibility. Germany was, along with France, one of the key EU members that promoted the idea of taxing financial transactions. The UK and Sweden openly voiced their objections to the introduction of an FTT, and Prime Ministers David Cameron and Fredrik Reinfeldt pledged not to support it.

Referring to the concerns of some MEPs regarding the arrangements between some EU countries and Switzerland, Šemeta stressed that any bilateral deals needed to respect EU competences. He also pointed out that Greece was one of the countries negotiating savings tax deal with Switzerland. European Council President Herman Van Rompuy and Switzerland President Eveline Widmer-Schlumpf held their meeting on the same day, but apparently did not discuss this issue.