Robert Troy
Question:106 Deputy Robert Troy asked the Minister for Finance his views on the introduction of a financial transactions tax. [36460/12]
View answerThursday, 19 July 2012
Questions (106)
Written answers
At the most recent ECOFIN meeting on Friday 22 June, it became clear that EU-wide agreement would not be reached on the Commission's proposed Financial Transactions Tax (FTT). Those countries that want to enact an FTT will now request the Commission to put forward a proposal that it be introduced via "enhanced co-operation". This mechanism would require at least nine Member States to participate and would require agreement by Qualified Majority Voting (QMV) comprising 72% of the overall votes and states representing 65% of the total EU population. Ireland is not going to be among the "enhanced co-operation" countries but we will not stand in the way of those who want to introduce an FTT under this mechanism. I have stated clearly in the past that, if an FTT cannot be introduced on a global basis, it would be better if it were introduced on an EU-wide basis. This would prevent any distortion of activity within the Union. I have also indicated our principled opposition to dealing with tax measures under "enhanced co-operation". So our non-participation in the new "enhanced co-operation" initiative is consistent with the position we have taken to date on the FTT.
It is also not clear what shape the FTT will finally take. The draft Directive had only received one initial reading and the current proposal could be modified.
A significant concern is that an FTT could affect transactions in Irish Government bonds, particularly in the secondary market, and may also affect the ECB's ability to give effect to its own monetary policy via the repurchase ("repo") market. A number of countries such as Sweden and the UK have also raised this point in respect of their own debt management. Given the difficulties faced by countries like Ireland, disruption of the Government paper market in the coming years would not be helpful.
An FTT could also affect the financial services industry, especially in the IFSC, and lead to some activities and jobs moving abroad. The UK is strongly opposed to an FTT and when other countries introduced similar taxes in the past, certain financial activities moved to London.
We are also concerned that the Commission's own projections are that an FTT could reduce EU growth and raise the cost to ordinary, non-financial companies for their use of financial products. Both these aspects would be harmful to EU recovery.
We will continue to monitor discussions on whatever proposal emerges from the "enhanced co-operation" process to ensure it does not interfere with the single market and takes account of the positions of other Member States. For example, any FTT on share transactions would have to take account of our existing Stamp Duty on Irish shares.