Webcast of today's Ecofin meeting: http://video.consilium.europa.eu/webcast.aspx?ticket=775-979-12415 Scheduled for 10am CET. Previous meetings have sometimes run 2 or 3 hours late however.
EU Set to Allow Nations to Move Ahead on Transaction Tax [...]Once the ministers give the green light to a transaction tax for countries that volunteer, the European Commission will be able to move ahead with technical work. Nations donât have to commit to adopting the tax plan until its design is set.[...] http://www.businessweek.com/news/2013-01-21/eu-set-to-allow-nations-to-move-ahead-on-transaction-tax
EU ministers allow 11 countries to pursue transactions tax Jan 22 (Reuters) - A majority of European Union finance ministers voted on Tuesday to allow Germany, France and nine other euro zone countries to prepare to introduce a tax on financial transactions, said two officials who attended the meeting. The vote clears the way for Germany, France, Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia to press ahead with their own tax on trading. "The decision on a financial transactions tax through enhanced cooperation was adopted," said one official at the talks. "Britain, Luxembourg, the Czech Republic and Malta abstained (in the vote)." http://www.reuters.com/article/2013/01/22/eu-transactionstax-vote-idUSB5E7LR01O20130122
surely they must have reached some sort of a compromise? why the hell would sweden for example vote in favour, and the uk abstain, otherwise?
They agreed to have phantom law on the books with non uniform implementation depending on local politics which assures that it will not work. Now the interesting part is if this tax will be enforced on foreign exchanges outside EU.
In the press conference (http://video.consilium.europa.eu/webcast.aspx?ticket=775-979-12397) it emerged that no actual vote took place. In discussions no-one indicated that they would vote against and four countries indicated they would abstain. Perhaps Sweden didn't indicate how they'd vote. A decision was made that it was clear that QMV would pass and everyone agreed on that. Noonan, the Irish chair, said that the meeting was about process not substance, and that no red lines had been put forward by non-participating countries. He also said that under QMV all 27 countries will go ahead and participate in discussions of the new tax but only participating countries will eventually vote. However the tax cannot go ahead if it runs counter to the principles of the single market. Semeta said he would produce a substantive proposal in the next few weeks based on the original 2011 proposal. A reporter asked if the residence principle (the extra-territorial part) would still be included, to which he replied yes. Semeta was asked what revenues he expected and said he'd produce numbers with the proposal. He said that the participating countries represented two thirds of the EU economy and 90% of the eurozone's economy and implied on that basis that compared with the original 27 country estimate of â¬57bn the revenue would be higher than the 11-16 ratio of countries would suggest ( completely ignoring the UK's disproportionate share of transactions).
Curiously odd. Without FTT details to vote on, FTT naysayers may not have wanted to vote no in a formal QMV at this juncture. They seem to prefer to keep a seat at the table as FTT architects design the final legislative bill language for EC-11 FTT. For sure, the naysayers will vigorously defend against extra-territorial reach, which runs counter to the single market and other tenants of the EU treaty. This is like a game of chess in unchartered waters and they will reserve legal challenges for last. I don't think EC-11 FTT with extra-territorial reach is a done deal by any means yet.
Passing a major new EU tax using enhanced cooperation is groundbreaking and difficult. EU leaders are using trial balloons on FTT to forge consensus. At each critical juncture in the process to move forward, they leave out critical objection points - like details on their FTTâs extra-territorial reachâ in order to keep kicking the FTT can down the road. Hoping it eventually snowballs into what they hoped for and the governments in power at the time pass it. Itâs similar in the U.S. where divided government is using incremental deals rather than a grand bargain for tax reform, entitlement reform and the debt-ceiling. Look back a few weeks in the EU to try and understand what took place over FTT. First, France and Germany indicated they wanted to defer the QMV vote until next monthâs ECOFIN meeting, which was probably because the QMV whip count indicated a potential no vote if extra-territorial reach was formally include at this juncture. A formal no vote could have derailed FTT for good in the EC-11. After thinking another month might help, they eventually realized that would weaken their case and a February QMV vote over FTT with extra-territorial reach would probably also be no. So, they figured it was safer to set extra-territorial reach details aside to keep the process moving forward. They put the QMV vote back on the Jan. 22 ECOFIN agenda minus contentious FTT details for extra-territorial reach. Itâs odd from reports how they conducted the QMV vote. They agreed to move forward on FTT, with all FTT naysayers keeping their seat at the table, so they can influence the leaders and make sure their voices are heard over extra-territorial reach. Let no one kid themselves. Extra-territorial reach is the absolute most important and key point. EC-11 FTT with no extra-territorial reach will lead to FTT advocatesâ greatest fears â losing transactions, banking and jobs to London and other non-FTT-adopters. Conversely, with extra-territorial reach included, the FTT non-adopters will still have EC-11 FTT applied on their exchanges on some instruments and or trades with members of the FTT zone and the taxes will be remitted to the FTT advocates, not the non-adopters. Thatâs their greatest fear, too. The UK threatening Brixit from the EU wonât help against the FTT extra-territorial reach problem, although it will influence the EC-11 FTT adopters. Consider that the French FTT applies to French ADRs on U.S. exchanges. The UK does not want to leave the EU or be banished from EU banking. The real battle has not changed. The UK currently has 70% of EU financial transactions and Paris, Berlin and Brussels want to reclaim a good percentage of those to the continental Eurozone, or force London to comply with their banking and tax rules, including FTT. That main battle has been punted and certainly not settled yet. Itâs everything to the UK, especially a Tory UK. The continents best hope may be that Labour reclaims control of government in the UK and join forces with the Eurozone. The next UK election is May 7, 2015 unless the current government coalition collapses before.