Finance tax compromise closer

Europe's finance ministers on Saturday seemed gradually to be coming closer to reaching a compromise on a disputed financial transactions tax.

A German plan tabled by Finance Minister Wolfgang Schäuble has won cautious support with its idea of an "intermediate step" towards a broader levy on transactions.

In a letter to his colleagues, Schäuble proposed "a tax payable on all transactions involving shares of corporations listed on a stock exchange, with the tax levied according to the place where the corporation has its registered office."

He said such a move would be based on a tax (stamp duty) already in force in Britain. This would make it more difficult for London to block, he suggested.

British opposition

Britain, which is home to 80 percent of Europe's finance industry, has remained opposed to a wide-ranging financial transaction tax.

It claims that the tax would drive investors away from the 27-nation European Union.

Sweden, which also opposes the transaction tax, however showed some willingness to compromise on the issue.

Swedish Finance Minister Anders Borg said he and the other ministers would "work constructively" to reach an EU-wide consensus. But he called for the proposal of a broad transaction tax to be dropped, calling such a levy "problematic" for both households and corporations.

Working group

Following the meeting, Schäuble said "good progress" had been made.

He said ministers had agreed to “look at a working group” if a unanimous decision on a broad financial transaction tax for all Europe was not forthcoming.

The transaction tax aims to make the financial industry pay its own way in the future after banks in particular received large government bailouts following the 2008 global financial crisis.

Plan to stop government bailouts

On this score, Danish Economy Minister Margrethe Vestager announced after Saturday's meeting that a European Commission plan to prevent governments having to pay bailouts to save banks should be tabled before the G20 meeting in June.

Vestager, whose country currently holds the rotating EU presidency, said all participants at the meeting welcomed this timetable.

The plan is expected to give more power to regulators when banks hit problems as well as the creation of crisis resolution funds and the introduction of so-called bail-in mechanisms, which would force shareholders to contribute to bank rescues.

Vestager admitted that issues related to funds and bail-in arrangements were "controversial."

This was the reason why the plans were not presented in late 2011 as originally scheduled, amid concerns that they could upset financial markets already made fragile by the eurozone debt crisis.

tj/ipj (dpa, AFP)