And Estonia makes 11

Financial Transaction Tax campaign
Financial Transaction Tax campaign (Photo credit: Leonardo Domenici)

Late yesterday, Estonia joined the 10 countries that plan on implementing a Financial Transaction Tax (FTT), due to the lack of agreement on implementing an EU wide Tax.

The 11 countries who will implement the tax next year are:

  • Austria
  • Belgium
  • Estonia
  • France
  • Germany
  • Greece
  • Italy
  • Portugal
  • Slovakia
  • Slovenia
  • Spain

According to Commission President, Jose Manuel Barroso

“This tax can raise billions of euros of much-needed revenue for member states in these difficult times. [..] This is about fairness – we need to ensure the costs of the crisis are shared by the financial sector instead of shouldered by ordinary citizens.”

But where will this money go? One suggestion is that this tax revenue would go into a Eurozone budget as all 11 countries use the Euro. While Development NGOs argue that the revenue should go towards those most in need in developing countries.

The Tax this has a way to go before it comes into force, and still has to be approved by the majority of Member State’s at council level as well as the European Parliament.

The EU-wide tax was shelved following opposition from Ireland, Luxembourg, Malta, Poland, Sweden and the United Kingdom, who fear being at a disadvantage in the absence of a World-Wide Tax.

More states can still sign up to this, but until details on the amount of tax charged on financial transaction and where the revenue goes is agreed, it is doubtful if the number of states involved in this enhanced co-operation will increase..

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9 EU states want a Financial Transaction Tax

European Union
European Union (Photo credit: ana branca)

Nine Eurozone members want the Danish Presidency of the EU to speed up its work on a directive on a Financial Transaction Tax (FTT). While there is much opposition within the Eurozone and wider EU to such a tax, the nine countries intend to use the community method to allow them to use the EU institutions to set up and administer the tax and allow other countries to join while not holding them back.

The nine countries are:

  • France
  • Germany
  • Austria
  • Belgium
  • Spain
  • Italy
  • Finland
  • Greece
  • Portugal

The inclusion of Greece and Portugal is interesting as they are in receipt of an IMF/ECB/EU Bailout while Italy and Spain haver been teetering on the edge for some time.

There is opposition to an EU wide tax mainly from the UK and Sweden with Poland and Ireland also voicing unease about the plans, so do not expect these countries to join up any time soon.

The letter comes at a time during the French Presidential Election where Nicolas Sarkozy has placed a lot of faith in such a tax to win votes at home and is of course implementing the tax in France with or without the other eight countries.

Taxation remains an unanimous decision at the Council of Ministers under the Treaty of Lisbon, so even if one country opposes there will not be an EU wide tax on financial transactions.