Germany eyes FTT concessions to get UK support
German Chancellor Angela Merkel is considering backing a UK-style stamp duty on share prices instead of a financial transaction tax to get UK backing for a EU wide tax, according to reports.
Merkel (pictured with David Cameron) has been pushing for an FTT to be introduced across the EU to help deal with the sovereign debt crisis. The UK Government says it will refuse to back the FTT because it would disproportionately affect the City. The tax cannot be introduced across all 27 member states without UK agreement.
But, Bloomberg, citing an interview in the German newspaper Reinische Post, quotes the German finance minister Harmut Koschyk as saying Germany has a “special interest” in having the UK involved.
He says: “In the context of current negotiations, special attention will certainly be paid to talks with the British side.”
In September, the European Commission proposed imposing a tax of 0.1 per cent on the buying and selling of bonds and shares and a tax of 0.01 per cent on the buying and selling of derivatives. The UK’s stamp duty on share sales is charged at a flat rate of 0.5 per cent.
Critics have said companies will relocate to avoid the FTT and that pension savers or other mutual fund investors would bear the brunt of the tax.
In its proposal the Commission suggested the FTT could raise up to £50bn a year. But, chair of the European parliament’s economic and monetary affairs committee and Liberal Democrat MEP Sharon Bowles says the Commission’s sums “do not stack up”.