Germany, France Try to Jump-Start EU Financial-Transaction Tax

(Bloomberg) -- Germany and France renewed their bid to unlock talks on a new European financial-transaction tax based on an existing French levy on stock trades.

German Finance Minister Olaf Scholz said the French tax is a good basis for talks, and could contribute to financing “European tasks in the euro zone” or the European Union as a whole. “If we can manage that it would be a breakthrough,” he said on Monday before meeting with his euro-area counterparts in Brussels. “We’ll have to work a bit more, but I believe it’s at least within sight how that could work.

The German-French proposal was floated in June as part of a road map for strengthening the euro area. The two countries said at the time that the French levy, which is focused on transactions of domestically issued shares, hasn’t led to “evasive shifts to other financial products or to disruptions on financial markets.” And they sought to reach a deal “swiftly.”

The European Commission, the EU’s executive arm, first proposed a financial-transaction tax in 2011 to make sure the industry made a “fair contribution” after taxpayers bore the costs of the financial crisis. When some member states opposed imposing an EU-wide levy, a smaller group sought a compromise under “enhanced cooperation” rules. Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table.

The 10 EU countries pursuing a financial-transaction tax agreed in June to evaluate the French-German proposal, but little progress has been made since then.

Austrian Finance Minister Hartwig Loeger, who is leading the talks, said the group needs more detail before it can assess the proposal. With the scope limited to domestically issued shares, this wouldn’t be a real financial-transaction tax, he said, but ministers will consider it as a potential alternative.

The group was previously working on a broader tax on transactions including derivatives, which would have accounted for more than half of projected revenue.

Belgian Finance Minister Johan Van Overtveldt, said the German-French initiative is a “positive evolution.” Belgium had criticized the previous plan.

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