European finance ministers have failed to reach an agreement on a proposed financial transaction tax. Now there is talk of watering down the measure to get something on the books. German commentators on Wednesday say that while it may be deferred for now, such a tax is inevitable.
The European Union has been wrangling over a potential financial transaction tax for more than two years, and there appears to be no end in sight. After attempted negotiations between EU finance ministers ended in disagreement on Tuesday, efforts have stalled indefinitely.
Last autumn, the European Commission filed a draft directive proposing a financial transaction tax that would extend to most financial operations and come into force in 2014. With an aim toward discouraging risky financial transactions, it would apply to trading in stocks, bonds, derivatives and other financial contracts, and could raise up to €57 billion ($75 billion) each year, according to the Commission.
But tax laws in the EU can only be implemented with unanimous support from all 27 European Union members, and Great Britain and Sweden won't get on board unless it's introduced globally. Ahead of the meeting with his counterparts on Tuesday -- the first to have the issue on its agenda -- German Finance Minister Wolfgang Schäuble already seemed prepared for failure. "Alternatives or compromises" may also require consideration, he said.
Schäuble had recently suggested an alternate plan by Berlin and Paris to implement the tax within the euro zone alone. But that idea is opposed by the Netherlands, Luxembourg and Ireland. If such a tax were to come into play, then all 27 EU members must agree, at the risk of an exodus by the financial industry, Luxembourg Finance Minister Luc Frieden said at the Brussels meeting.
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