Germany will press for an international agreement on introducing a finance market transaction tax in spite of a lack of consensus on this issue among European Union Finance Ministers and US Treasury Secretary Mr Timothy Geithner at their weekend meeting in Poland.
The German Finance Minister Mr Wolfgang Schaeuble, who leads a group of EU nations seeking the speedy introduction of such a tax on a global level, said there are some chances for introducing it in the EU, even though deep divisions still exist.
“We are working with great determination to introduce a finance market transaction tax in Europe and we hope the (European) Commission will come up with its proposal on that in October,” he said.
If some of Germany’s partners continue to block an agreement on introducing the proposed tax in the entire European Union, then his country will try to get it introduced at least in the euro zone this year, Mr Schaeuble told Sunday’s edition of Bild newspaper.
Mr Schaeuble insisted that a tax on financial dealings worldwide is necessary to stem “excessive speculations” in the financial markets, reduce volatility and to involve banks in sharing the costs of past and future bailouts.
He also called for regulating financial markets “speedily and more effectively” and for creating more transparency.
A ban on short-selling agreed to recently by the German government was only the beginning of various measures contemplated.
It also has plans to regulate hedge funds and private equity funds, as well as a number of highly speculative financial products, he said.
The only tangible outcome of the two-day meeting, which ended in the Polish city of Wroclaw on Saturday, was an agreement between EU Finance Ministers to tighten the union’s stability pact to avert a future debt crisis.
They agreed to impose automatic sanctions on member nations violating the budgetary deficit and debt limits set by the pact.
They also agreed on new measures to detect signs of financial trouble in member nations at an early stage and to tackle them before they evolved into a debt crisis.
An initiative by the EU to introduce a financial transaction levy on a global level failed to take off on account of opposition from US Treasury Secretary Mr Timothy Geithner, who attended the EU Finance Minister’s meeting for the first time.
Britain, Italy and Sweden blocked an agreement on introducing the proposed levy in the EU, expressing fears that it will diminish the importance of their financial centres.
France, Belgium, Luxembourg and Austria joined Germany to fight for introduction of the tax.
The Belgium’s Finance Minister, Mr Didier Reynders, called upon his EU partners to continue their efforts to secure an agreement on introducing such a tax worldwide or at least in the 27-nation group.
“If that is not possible, we in the euro zone should come forward with it,” he said in a TV interview.
The European Commissioner for Internal Markets Mr Michel Barnier told journalists after the meeting that there was no consensus among the finance ministers on introducing a finance market transaction levy either on a global level, or in the EU.
Nevertheless, the commission will present draft legislation on the proposal in the coming weeks.
Supporters of the plan argue that such a tax could be used to raise funds for repaying at least a part of the money spent by governments in bailing out banks during the global financial crisis and to make banks accountable for their business practices in future.
The European Commission estimates that by charging a tax of between 0.01 per cent and 0.05 per cent, up to 30 billion euros could be raised annually, media reports said.
The Poland Finance Minister Mr Jacek Rostowski, who chaired the meeting in his capacity as the current chairman of the EU council of ministers, spoke of “huge divisions” in the EU over the tax issue.
He also expressed doubts about the usefulness of introducing such a tax and wondered whether it would reduce volatility in the financial markets.