By Patricia Kowsmann 

Germany, France, Italy and seven other countries are moving forward with a plan to impose a joint financial transaction tax on stock trading, an effort that has proved elusive in Europe.

Under a new blueprint for the tax, sent by Germany Finance Minister Olaf Scholz to the other governments on Monday and seen by The Wall Street Journal, anyone buying shares in large companies domiciled in those countries and with a market value of over EUR1 billion ($1.1 billion) will have to pay a minimum 0.2% tax over the transaction value.

No levy would be imposed on initial public offerings, market making, share buy backs and purchases by pension funds.

Companies whose shares would be subject to the tax include Germany's BMW AG, French drugmaker Sanofi SA, Inditex, the Spanish owner of fast-fashion retailer Zara, and Italian lender UniCredit SpA.

The move comes as discussions over such levies have become part of the campaign platforms of candidates in coming elections in the U.S. and the U.K. Sen. Elizabeth Warren has vowed to use the tax to finance her Medicare for All health-care plan. In the U.K., where for decades there has been a stamp duty on real-estate transactions and share transfers, the main opposition Labour Party is proposing to widen the securities included, from forex to derivatives.

France and Italy have already moved forward with their own national transaction taxes but have vowed to join the new system set up across the 10 European countries once it is in force.

Taxing financial trades have gained popularity after the financial crisis as a way to curb speculative excess and to fund government expenditures. Some in Europe have resisted the move, fearing taxing financial trades could further erode the development of the Continent's already weak capital markets.

Proceeds from the charge, which the German blueprint estimates at EUR3.4 billion, would be split among the countries, which also include Spain, Greece, Portugal, Belgium, Austria, Slovenia and Slovakia.

Earlier plans for a European Union-wide transaction tax failed to materialize in 2012 over disagreement among members. Back then, the European Union's executive arm proposed a 0.1% tax on share and bond trades and a 0.01% levy on derivative transactions, generating an estimated annual revenue of EUR30 billion to EUR35 billion if imposed by all 28 countries. After the deal fell apart, 11 countries remained committed to striking a deal. Estonia eventually dropped out.

The draft plan sent out by Germany to the other nine countries this week suggests they may be close to completing a deal, which is smaller in scope. At their last meeting in November, the participants tasked Mr. Scholz with coming up with a compromise proposal.

"In recent months, we successfully pressed forward with negotiations at the European level. We are now close to reaching our goal," Mr. Scholz wrote.

Germany is under some time pressure to deliver an agreement since the government has already earmarked the expected proceeds to pay for higher state pensions for the poor starting in 2021. It expects revenues of about EUR1.5 billion a year from the tax.

Given the glacial pace of progress at the European level, however, a debate has opened in Chancellor Angela Merkel's coalition over whether Germany should deploy its own national tax ahead of a European agreement, following the French and Italian approaches.

Write to Patricia Kowsmann at patricia.kowsmann@wsj.com

 

(END) Dow Jones Newswires

December 11, 2019 09:43 ET (14:43 GMT)

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