Vienna, 10 October 2012 Green light for financial transaction tax – 11 countries in favour

Following lengthy discussions on the financial transaction tax, it can now finally be launched. At a meeting of EU Finance Ministers held on 9 October 2012 in Luxembourg, agreement was finally reached on the introduction of so-called "enhanced cooperation", which is backed by eleven states. According to the EU Treaty, at least nine countries need to be in agreement.

Of these eleven countries, to date seven have already transmitted a written application to the Commission. In addition to Austria, they are Germany, France, Greece, Belgium, Portugal and Slovenia. Four others – Estonia, Spain, Italy and Slovakia – have pledged their cooperation. These four countries still have to submit their support in writing.

It is still not yet clear what precisely will happen to the revenues from the financial transaction tax. If a corresponding agreement were to be reached, the countries could use the money themselves as they wished. However, the Commission proposal, which is to apply to all 27 countries and serve as a basis for the present eleven countries, provides for apportionment between the EU budget and national use. "If we have a financial transaction tax in Europe, we want to have the same degree of relief on our payment obligations. Every country has made that clear. Neither can there be any hasty gifts to those who do not join in. Quite the contrary; there must be more motivation for more to participate," stressed Austrian Finance Minister Dr Maria Fekter.

From the outset, Fekter showed herself to be very confident that the requisite number of at least nine countries, as required for introducing a financial transaction tax, would be achieved. "What we want is to be able to commence greater cooperation and reach a common denominator as regards the detailed structure. The precise details need to be worked out by Christmas. Of course, the tax must also have a certain stabilizing effect in the financial sector," added Fekter.

With regard to the precise structure of the tax, Fekter declared that a solution similar to that of a simple tax on stock-exchange dealings would not really be effective, since it would yield too little revenue and above all it would only affect the stock markets, which are in any event already regulated. "We want off-market transactions to be covered too, in particular those areas which give us a deal of concern," said Fekter, adding that, at the same time, the end result should not be a hampering of the real economy or a squeeze on credit. The current plan was for tax to be payable if a transaction partner was in a participating country, irrespective of whether this was their home country or a third-party country.

Finally, Fekter stressed the immense significance of a financial transaction tax: "The financial transaction tax has a stabilizing effect and will bring in funds enabling us to reduce the debt mountain." Accordingly, the financial transaction tax makes economic sense and means the financial sector is making an important contribution in terms of shouldering the burden of the crisis. "I don't want to ask Austrian taxpayers to put up more money if, for instance, we were to have to secure the savings of the Cypriot population. No-one would have any understanding for that. Quite clearly, we need new sources of funds, such as the financial transaction tax. Today's decision is an important step for a stable Europe," concluded Fekter confidently.