Tuesday, 12 June 2018

Questions (236)

Catherine Connolly

Question:

236. Deputy Catherine Connolly asked the Minister for Finance the steps being taken to introduce a financial transactions tax; and if he will make a statement on the matter. [25265/18]

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Written answers (Question to Finance)

In September 2011 the European Commission presented a proposal for a Financial Transaction Tax (FTT) in all Member states of the EU to be levied on all financial instrument transactions between financial institutions where at least one of the transaction parties is located within the EU. The proposed rate on exchanges of shares was 0.1% and the proposed rate for derivative transactions was 0.01%. The tax would be levied on financial institutions – non-financial institutions would not be covered.

Ireland currently has a tax on financial transactions, a Stamp Duty on transfers of shares in Irish incorporated companies, which currently stands at 1%. In 2017 this stamp raised €428 million (€389 million in 2016).

The report ‘Getting Ireland Brexit Ready’ which was published in October 2016 in conjunction with Budget 2017, committed the Department of Finance to conduct a review of stamp duty on share transactions in 2017.

Following from this, the Department of Finance launched a review and associated public consultation under the title ‘Review of the Application of Stamp Duty to Stocks and Marketable Securities of Irish Incorporated Companies’ in September 2017.

A report on the outcome of this review and public consultation is currently being prepared for my consideration in advance of Budget 2019.

In relation to discussions at EU level, the Government's position is that an FTT would be best applied on a wide international basis to include the major financial centres to prevent the danger of activities gravitating to jurisdictions where taxes are not levied on financial transactions.

Notwithstanding this, the Government previously indicated that it did not wish to stand in the way of EU Member states that wish to work together to implement an FTT and in this regard adoption of a decision formally authorising enhanced cooperation took place during the Irish Presidency of the EU in January 2013.

The proposal for a Directive from the European Commission in the area of FTT was published in February 2013. Ireland had many concerns about the proposal as drafted, not the least of which were the potential impacts on, and the trading of, Irish Sovereign debt in the secondary market and in total, the potential negative impact on the liquidity of the financial sector as a whole.

Our concerns are widely shared amongst other Member states, including some of the participating countries.

Opponents of the EU FTT, including Ireland, continue to argue that it only makes sense if it covers many countries or else transactions will shift toward those financial centres which are not covered by it.

Much uncertainty still remains as to the form any FTT might take or if the initiative will be agreed to at all.