Germany and France Join to Support Tax on Financial Trades
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Version 0 of 1. BRUSSELS — The finance ministers of France and Germany united Friday to raise pressure on E.U. partners like Italy to back a tax on financial trades that could be used to help the economically disadvantaged. A letter to the Union’s 25 other finance ministers showed Berlin and Paris working together again despite sharp differences over the number of lenders a single banking supervisor for Europe should regulate, and how soon it should go into operation. Proponents say that the so-called Robin Hood tax could help recoup huge sums of money that governments have spent to save banks by levying a small tax on most share, derivative and bond trades. “We strongly believe in the need for a fair contribution from the financial sector to cover the costs of the financial crisis,” Pierre Moscovici of France and Wolfgang Schäuble of Germany wrote in the letter. “We would be very grateful if you were to show your willingness to go forward with this issue and participate in this matter,” they wrote, adding that “the request should be submitted as soon as possible.” Algirdas Semeta, the E.U. commissioner for taxation, said Friday that he was ready to draw up legislation applying only to countries that wished to adopt the tax as long as he had the backing of at least nine of them. The French-German appeal is unlikely to alter the views of skeptics like Britain, which has warned that such a tax would push banks and other financial institutions to abandon European financial centers like the City of London. Along with France and Germany, Austria, Belgium, Estonia, Greece, Portugal and Slovakia would probably support the tax. But that still leaves the need for at least one more country to swing behind the tax, putting the spotlight on Italy. Italy has been wavering on whether to commit to the tax, prompting speculation that it has been holding out for a gesture of support from Germany on future financial support. But the letter raises the stakes for the government in Rome, which would be loath to be seen siding with the British on an issue that has suddenly gained traction as a novel approach for redistributing at least a small portion of the profits amassed by wealthy investors at a time when citizens are being squeezed economically. The letter had “also been done to demonstrate Franco-German unity, especially given the ongoing tension between the two on various aspects of banking union,” said Mujtaba Rahman, an analyst at the Eurasia Group. Mr. Semeta has already proposed legislation that would levy a fee of 0.1 percent on the value of all stock and bond trades, and of 0.01 percent on all derivatives trades. Under that proposal, Britain would have a partial exemption because only trades between banks in Britain and those in countries that adopted the system would be taxed. “Even if implemented among a more limited group, the financial transactions tax offers real benefits,” Mr. Semeta said. “Citizens are waiting for this tax, so the sooner it can progress, the better.” |