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By Joe Kirwin
Finance ministers from 10 European Union countries will try again this month to reach an agreement on a financial transactions tax, a levy that has stymied negotiators for several years.
The ministers suspended negotiations in September to examine the impact on the levy of the U.K.'s departure from the EU next March.
European Commission officials confirmed to Bloomberg Tax that the first ministerial meeting since mid-2017 will take place the last week of May. It will be an effort to rally political momentum on issues related not only to Brexit but to concerns on how the financial transactions tax (FTT) would impact pension funds and the insurance market. Finance ministers will also consider the challenges related to collecting and distributing revenue from the levy.
“Austria has called for a ministerial meeting to take place when EU finance ministers meet at the end of the month,” European Commission spokeswoman Vanessa Mock told Bloomberg Tax in an April 30 email.
Mock added that the commission will release several studies about Brexit’s impact on the FTT in advance of the meeting.
The 10 EU countries—which include Germany, France, Italy, and Spain—have been negotiating an FTT that calls for a 0.1 percent levy on equity and bond trades and a 0.01 tax on derivatives.
Two EU diplomats, speaking to Bloomberg Tax on the margins of an April 27-28 finance minister meeting in the Bulgarian capital of Sofia, confirmed that Austria, as chairman of the negotiating countries, will guage the new German coalition government’s commitment to the levy.
“The key issue at this point is whether or not the commitment by the new German coalition government to the FTT will give the negotiations new political momentum,” one EU diplomat said. “If the German government sends a signal it sees this issue as a high political priority, then we can surely move forward.”
The German coalition agreement signed in February between Angela Merkel’s Christian Democratic bloc and the Social Democratic Party included a specific commitment to work for a “substantial FTT.” The commitment was a condition of the Social Democratic Party’s participation in the coalition.
Joachim Englisch, a professor of tax law at the University of Muenster in Germany, told Bloomberg Tax that despite the German coalition’s commitment to the FTT, it isn’t clear if new German finance minister Olaf Scholz shares the fervor of others in his party.
“He comes from the conservative side of the Social Democratic Party,” Englisch said. “It could be that he wants to make a new attempt but I think if there is resistance from France he will not push it.”
A spokesman for Scholz didn’t respond to a request for a comment.
France, which has its own national FTT on equity and bond trades, has some resistance to the levy. Previous French governments opposed a levy on derivatives.
The current French government led by French President Emmanuel Macron insists it backs the FTT but wants to gauge its impact on Brexit. France has previouslyraised concerns the FTT could hurt its efforts to lure London-based banks to Paris.
Lead EU Brexit negotiator Michel Barnier insisted April 26 in Sofia that the EU wouldn’t agree to any exemptions for the U.K.-based financial services industry when it comes to access to the EU single market.
In July 2017, more than 50 high-profile finance and banking officials, including regulators and academics, urged the EU finance ministers to move forward.
They said the FTT won’t impact whether banks decide to move to continental Europe after Brexit. They insisted an FTT would “rebalance financial markets away from a short-term trading mentality” and address issues such as high-frequency trading.
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