Germany Pushes Forward on European Financial Transactions Tax
December 11 2019 - 09:58AM
Dow Jones News
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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