EU Financial Transaction Tax Set for Make-or-Break October Vote

(Bloomberg) -- The 10 European Union countries pursuing a financial transaction tax need to lay their cards on the table next month for work to continue on the levy, Austrian Finance Minister Hans Joerg Schelling said.

“The open questions can be answered and each of the 10 countries can say ‘yes’ or ‘no,”’ Schelling, who’s leading talks on the proposed tax, said in a Sept. 8 interview in Vienna. “Everyone has to declare his intentions. It makes no sense to exchange the same arguments for a 17th time.”

The European Commission, the EU’s executive arm, first proposed the tax in 2011 to get a “fair contribution” to the cost of the financial crisis. When this plan failed among all 28 EU nations, a smaller group sought a compromise under “enhanced cooperation” rules, which require consensus from at least nine countries. Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table.

Two working groups were charged in June with tackling the two main sticking points -- the treatment of derivatives on sovereign debt and how to make the tax cost-effective. They “have done the calculations and the results should be there within the next two to three weeks,” Schelling said. “There has to be a decision in October” when euro-area finance ministers meet in Luxembourg, he said.

‘Final Decision’

Schelling had previously said a “final decision” would have to be made in September when the task forces reported back. That deadline slipped by a month because the groups weren’t able to wrap up their work over the summer.

“It would be a pity if the first enhanced-cooperation project ends in failure, because in reality, enhanced cooperation is the way the EU is going,” Schelling said. “There’s not going to be enhanced cooperation for the entire EU.”

Belgium’s finance minister, Johan Van Overtveldt, has said he’s opposed to the tax and is trying to convince his coalition partners to withdraw. Slovenia and Slovakia are also seen as potential dropouts, according to two European officials close to the talks.

The EU’s drive to deepen and integrate capital markets could provide a fresh impetus for a bloc-wide tax, “but I don’t think that’s very likely,” Schelling said.