Associated Press
WROCLAW, Poland (AP) - European Union finance ministers are debating a tax on financial transactions that could raise money for the EU as well as make banks share the burden of bailouts, but strong resistance means the idea is scaling back from a global tax to just a European one.
Discussions Saturday in Wroclaw, Poland, showed the ministers were far from an agreement. Opponents of the EU-only approach warned that such a tax will only work if imposed globally, because otherwise banks will simply move transactions to places with no tax.
"There isn't a consensus," said EU Internal Market Commissioner Michel Barnier. "There is no common position on this idea, no agreement in the EU. We are only starting the debate."
Supporters say the tax, which would take a tiny slice of a large number of financial dealings, could help make banks repay governments for some of massive amounts spent bailing them out during the 2007-2009 financial crisis, and could also reduce the disconcerting volatility on financial markets since the crisis.
The European Commission will present a proposal next month for a tax. France and Germany back the plan but Britain is strongly opposed because London is a large banking center. The U.S. also against the idea, meaning the EU will have to decide if it wants to go it alone or even shrink the proposal to just the 17-nation eurozone.
There is also deep debate over who would get the money - national governments or the EU in Brussels - and any proposal would have to get past member states and the European Parliament. The Commission proposals assume the tax could generate euro30 billion ($41 billion) a year for the EU budget, relieving contributions from its 27 member states, while governments such as Germany think the money should head to their coffers.
The Commission proposal will lay out a minimum rate, with the revenue going to Brussels while countries could impose a higher rate and keep the difference. It is not clear, however, how popular that will be when many Europeans begrudge Brussels for its lack of cost-cutting in austere times.
Also undefined is what possible transactions it could apply to: stocks, foreign exchange, and derivatives are among the possibilities.
Germany's Finance Minister Wolfgang Schaeuble, a supporter of the tax, said he was "not so pessimistic" about overcoming opposition.
"Ideas are beginning to shift," he said.
Schaeuble said collecting the revenue was not just about making banks pay but would also "decelerate the irrational exaggeration in the markets."
Belgian Finance Minister Didier Reynders indicated that supporters did not make much headway at the meeting but would raise the issue again at next week's meetings of the International Monetary Fund and the Group of 20 rich and developing countries in Washington, DC.
"We tried to put this on the table yesterday and today and it's more difficult, I must confess," Reynders said Saturday.
He said if a tax can't be imposed in all 27 EU member countries, then it could be discussed for the 17 that use the euro - a group doesn't include Britain.
"I am sure it's possible to start it in the 17," Reynders said.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Source: http://www.8newsnow.com/story/15485421/eu-countries-divided-on-possible-new-finance-tax
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