Government will oppose financial tax plan unless it is adopted globally
There are deep divisions between member states on the controversial tax with some warning it will damage the financial services industry in cities including Dublin and London, forcing them to relocate.
But there is pressure from some governments, notably France and Germany, and from NGOs and some economists for the tax, arguing that it would compensate taxpayers for their €4.6 trillion bail-out of banks and the consequent increase in countries’ debts.
Finance Minister Michael Noonan fears that if the proposal was vetoed at EU level that France and Germany would concentrate then on having it adopted by the 17 eurozone countries, which would exclude London, one of the country’s major competitors.
“Obviously Ireland would have concerns about any tax that would distort the market. A transaction tax would need to apply to the whole 27 rather than the 17 euro countries because we can’t have a situation where there is a transaction tax in Dublin and there is no transaction tax in London,” said Mr Noonan.
However, he made it clear that Ireland’s objections go further than this and that he believes such a tax would need to be applied globally, as mooted a number of years ago at a G20 meeting.
“There is also a need to ensure that our response to the crisis is coordinated at the global level, to make sure that measures are internationally consistent,” he said.
But as the US is absolutely opposed to such a tax, there is widespread acknowledgement that it will not happen globally. The proposal for the tax from 2014 could also lead to tensions in the Government with members of the Labour party firmly in favour, provided it applies to the whole EU.
MEP Nessa Childers said the claim that it would trigger an exodus was “ludicrous”.
“Europe is the biggest economic block in the world so we should lead on the issue. Financial transaction taxes at national level, such as the UK stamp duty, show that tax does not make investors flee. A tiny tax will not harm European competitiveness,” she said.
European Commission president Jose Manuel Barroso announced the plan to applause in the European Parliament where it is supported by all three major political groups. It would be levied on all transactions between financial institutions when at least one party is located in the EU. The rate would be 0.1% on shares and bonds a 0.01% on derivatives.
