EUROPE – The European Commission's taxation commissioner has argued that the current plan for enhanced cooperation on the Tobin Tax is preferable to a "patchwork approach" that would result from the 11 committed member states planning their own, individual regimes.

Under current plans, 11 countries – including France, Germany, Belgium, Austria, Slovenia, Portugal and Greece – are to work towards a joint proposal on the financial transaction tax (FTT) without the motion receiving unanimous support from all of the European Union's 27 members.

The Netherlands has previously said it would support an FTT as long as certain provisions were met, including an exemption for pension funds.

Addressing the Economic and Financial Affairs Committee (Ecofin), commissioner for taxation Algirdas Šemeta said it was important to move quickly on any transaction, given the benefits it offered.

Šemeta also said the process of enhanced cooperation – whereby work can begin on proposals so long as at least nine member states agree – for the FTT was both "fully justified and legally complaint".

He added: "Our analysis showed that enhanced cooperation on FTT will not undermine the internal market. On the contrary, it will significantly reduce its fragmentation and will strengthen it.

"No evidence – economic or otherwise – was found that challenged this conclusion."

He also attempted to refute arguments that, without cooperation by the Commission, the FTT would not progress at all.

"It is important to understand that the alternative to enhanced cooperation is not the absence of financial sector taxation," he said.

"It is the implementation of 11 different national forms of FTT instead of a single one."

He said a uniform approach would preferable, as it would "avoid complexity and added burden for businesses and investors".

Ecofin previously passed a resolution stating that pension funds would be exempt from any forthcoming FTT.

Detailing its proposals once more, minutes from yesterday's meetings noted that, under current proposals, transactions would be taxed at 0.1%, with the exception of derivatives trades, taxed at the lower 0.01%.

The minutes added: "The aim was for the financial industry, which many consider as under-taxed, to make a fair contribution to tax revenues, whilst also creating a disincentive for transactions that do not enhance the efficiency of financial markets."

Topics