Germany’s SPD wants transaction tax a condition for joining banking union

Chancellor Angela Merkel’s potential coalition partners, the Social Democrats, want to make a proposed financial transaction tax a requirement for participation in a European banking union.

Germany’s SPD wants transaction tax a condition for joining banking union

Germany is one of 11 eurozone countries that support the tax plan, which the European Commission estimates could generate as much as €35bn annually in its current form.

Only participating states will have a vote on the proposal. In January, the UK filed a legal challenge to the EU’s decision that allowed the 11 states to proceed.

“This tax should be made a condition for joining the banking union,” Carsten Schneider, budget spokes- man for the Social Democrats, or SPD, said in a written reply to questions. “For the SPD, it’s important that taxpayers in the future are no longer liable for banks.”

The 28 EU states have set a year-end deadline to reach a common position on a proposal by Michel Barnier, the bloc’s financial-services chief, for a Single Resolution Mechanism that would centralise the handling of euro-area banks in financial trouble and have a common fund financed by a levy on the banking industry.

Germany has led the attack on Barnier’s plan, challenging its legal basis and warning it could weaken governments’ control over their budgets.

The SPD will push for using financial-transaction tax revenue to fill the Single Resolution Fund when the party begins coalition talks with Merkel’s Christian Democrats tomorrow, Schneider said.

Under Barnier’s plan, a designated bank levy would take 10 years to fill the fund.

While transaction-tax revenue would replace Barnier’s levy during the topping-up process, once the fund is full, the planned levy would kick in, said Schneider.

The SPD rejects Merkel’s preference for having a network of national regulators handle bank resolution.

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