Interest in EU’s financial transaction tax waning
BRUSSELS: A six-year push to impose a tax on financial transactions in Europe may have run its course, with Germany and France dragging their feet as they prepare for Brexit and a redrawing of the financial map that has already begun.
French Finance Minister Bruno Le Maire said earlier this month Brexit could bring “thousands of jobs to Paris”, an opportunity that could be lost if the tax were imposed.
His German counterpart, Wolfgang Schaeuble, said “quite a bit speaks in favour of the French argument to look first at how the Brexit negotiations are going”.
With the heavyweight boosters among the 10 countries pursuing the tax getting cold feet, the plan’s future looks bleak.
“Some had said Brexit could prompt further interest in the financial transaction tax (FTT)”, said Dan Neidle, a partner at Clifford Chance in London.
“In fact, it looks like the opposite is the case. Brexit has prompted impressive efforts from the French and others to attract the financial sector — those efforts would be completely undermined by the FTT.”
The European Commission proposed the tax in 2011 to make sure the industry made a “fair contribution” after taxpayers bore the costs of the financial crisis. When some member states opposed the levy, a smaller group sought a compromise under “enhanced cooperation” rules.
Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table. A decision to impose the tax could benefit Ireland and Luxembourg, which are actively courting the big banks and are not part of the group pursuing the tax.
French President Emmanuel Macron’s new administration has also changed gear and made luring firms to Paris a priority.
“Sure I want the tax, I just want us to take into account this change that is the UK exiting the European Union,” said Le Maire. “And I want these decisions to be taken collectively.”
Frankfurt has emerged as the biggest winner in the fight for thousands of London-based jobs that will have to be relocated to the EU after Britain quits the bloc.
Standard Chartered Plc, Nomura Holdings Inc and Daiwa Securities Group Inc have picked the German city for their EU headquarters.
Citigroup Inc, Goldman Sachs Group Inc and Morgan Stanley were weighing a similar decision, said sources.
HSBC Holdings Plc is the biggest non-French bank so far to opt for Paris. Bloomberg