Finance ministers of the European Union's 27 member states are expected to discuss the increasing number of requests for a financial transaction tax when they meet in Luxembourg next Tuesday (9 October).
Last Friday (28 October), the finance ministers of France and Germany sent a joint letter to Algirdas Šemeta, the European commissioner for taxation, to request a proposal for a transaction tax under the ‘enhanced co-operation' process – which allows legislation to apply to some but not all member states, on the proviso that at least nine countries take part. Belgium and Austria this week also submitted requests and it is possible that at least nine will have joined the list by the time that the finance ministers meet.
In their letter, Wolfgang Schäuble, Germany's finance minister, and Pierre Moscovici, his French counterpart, wrote: “European integration in this matter is necessary in order to counteract distortions through measures taken nationally by member states, bearing in mind the high mobility of financial transactions and the need for the proper functioning of the internal market.” The UK, Sweden, Ireland and Luxembourg had indicated that they will not support such a tax and have said they will not participate in the enhanced co-operation.
Schäuble and Moscovici said that they wanted the “scope and objectives” of the financial transaction tax to be based on the Commission's original proposal from September 2011. That proposed imposing a tax of 0.1% on trades in shares and bonds, and a 0.01% tax on derivatives trading, with the proceeds going towards the central EU budget.
Which is good news for London, where the taxes will not apply. We already have a stamp duty reserve tax on share trades, but not on other instruments. if other countries want to see whatever derivatives trading they have disappear to London, Zurich and Luxembourg, then who are we to stop them?