Germany and France are moving toward a joint proposal on a European financial-transaction levy and are considering taxing derivatives from the start, German lawmakers said.
After more than a year of talks among European Union countries, German and French negotiators are under pressure to lead the way toward a deal with Spain, Italy and seven other nations after Chancellor Angela Merkel and President Francois Hollande set the target of reaching an accord by May 25.
While France has indicated it wants to limit fees to stocks at the start of the levy’s gradual introduction, German Finance Minister Wolfgang Schaeuble said on March 5 that taxing derivatives transactions immediately “makes sense.”
“Other member states are signaling that they’re ready to talk about possibly including derivatives in the first phase,” Antje Tillmann, the finance spokeswoman for Merkel’s governing Christian Democratic bloc in parliament, said in written replies to questions on March 14. “I view that as a good sign,” though there’s no agreement yet, she said.
European Union officials are working on the tax with 11 euro-area nations, including the four biggest, after a proposal to cover all 28 EU members failed. While Hollande said on Feb. 19 he prefers “an imperfect tax to no tax at all,” government officials in Estonia and Belgium, which have signed up for the plan, question the value of imposing a levy with limited scope.
“We’re getting closer to an agreement,” said Ingrid Arndt-Brauer, the head of the German parliament’s Finance Committee, whose members are briefed by the Finance Ministry on government policy. “There are signs that Hollande is ready to include derivatives in a financial-transaction tax.”
It isn’t clear which kinds of derivatives would be covered under this plan, Arndt-Brauer said in an interview. The French Finance Ministry declined to comment on the state of the negotiations today.
EU finance ministers allowed member countries in January 2013 to move forward on a transaction tax on stocks, bonds and derivatives expected to reap as much as 34 billion euros ($46 billion) a year, including 11.8 billion euros in Germany. The list of taxable transactions and when to include them in the levy isn’t agreed yet.
Germany and France will work with the other nine countries with the goal of reaching an accord before the European Parliament elections in May, Hollande said after talks with Merkel in Paris on Feb. 19.
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