The EU has kicked any decision on introducing a financial transaction tax to further in the year following a wide-ranging but inconclusive discussion of the bill by finance ministers.
Ireland fears that introducing such a tax would force companies that deal with financial trading including hedge funds to countries that do not have it, including London, which has said that it will not impose the tax.
Michael Noonan, the finance minister, argues that Ireland would only be in favour of introducing this tax if it was introduced globally.
But German finance minister Wolfgang Schaeuble described this attitude as “the best way to ensure that nothing will happen”.
He said it would be disastrous if after all that has happened with the financial crisis, they had not learned a lesson, and that they needed to ensure that they could fight tax evasion and avoidance by the financial sector.
He believed that Europe could go ahead with a tax and that others would probably follow. If there was no agreement, then other alternatives could be considered.
France has introduced a form of the tax similar to the stamp duty imposed by the City of London and they urged member states to work to agree some form of tax that would be effective in ensuring the financial sector paid its fair share.
The Dutch said they favoured some form of tax but studies carried out by their central bank and others showed the tax would have a negative result and would not generate enough money to offset a shift of companies to other states.
Britain suggested other countries follow their lead and introduce a bank levy that raises £2.5bn (€3bn) a year for them and stamp duty which raises £2bn a year. However, they warned against introducing VAT for banks, saying they would then be able to recoup their VAT payments, and could end up paying less.
Mr Noonan said Ireland has a stamp duty on transactions double that of Britain.
The ministers will discuss the issue in more detail in Copenhagen at the end of the month.
Tax commissioner Algirdis Semeta said they would return with studies showing the effect of the tax on business and growth and added that they were open to discuss other areas of the issue.
Recent studies showed that the British tax did not affect hedge funds or high frequency trading.
The study, commissioned by the Socialist group in the European Parliament points out that Hong Kong, Seoul, Mumbai, Johannesburg and Taipei — among the most rapidly growing financial centers in the world — have had financial transaction tax for some time and raise over €17.5bn a year from it.
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