Financial tax would be threat to jobs -- Noonan
Published 09/11/2011 | 05:00
A NEW tax on financial transactions would threaten jobs at the IFSC in Dublin, Finance Minister Michael Noonan has warned.
Yesterday Ireland was among a number of euro members that blocked the European Commission (EC) proposal. It was the main topic of discussion at yesterday's meeting of the ECOFIN group of European Union finance ministers in Brussels.
France and Germany both backed the plan, while the UK and Sweden -- which are both outside the euro area -- were known to be against it even before talks got under way.
"It would be very onerous on our financial-services industry if there were a financial tax in Dublin but no tax in London," said Mr Noonan in Brussels.
The planned tax would work like VAT, with a charge levied on financial deals, such as buying shares or selling bonds.
Mr Noonan said he was not against the plan in theory, but that charging a levy on deals done in Dublin when there was none in London would cost jobs.
He also questioned estimates of how much income would be raised from such a tax.
The proposed new tax is sometimes known as a "Robin Hood tax" because supporters say it is a way to take from rich institutions and cut the burden on ordinary taxpayers.
However, opponents say it would be dangerous to impose a new tax when the banking sector has never been weaker.
They claim that it will drive banks and traders offshore and that ordinary customers will then end up carrying the cost.
French President Nicolas Sarkozy pushed his vision for a global version of the tax at last week's meeting of the G20 leaders in Cannes. But his proposal met little success from the likes of the US and China.
Yesterday in Brussels, the French, German, Belgian and Finnish finance ministers all threw their weight behind a back-up plan to press ahead with the plans in Europe -- or at least in the eurozone. They met staunch opposition from Sweden's finance minister and Britain's George Osborne.
"No banker and no bank will ever pay this tax," said Mr Osborne, who argued that the burden would fall on pensioners and countries that had to borrow in the markets.
He added: "The idea that the US and China -- let alone Singapore -- will consider this is fanciful."
The tax discussion took centre stage after ministers had to drop a plan to discuss shoring up the capital base of European banks so that they would be in a stronger position to survive the current economic crisis.
That was because of the difficulty of agreeing any measures for the bank sector as long as Italy and Greece are mired in crisis and the cost remains unknown.
The ministers did sign off on the so called 'Six Pack' initiative which had been agreed by European leaders in October.
This is a programme of six new rules strengthening EU oversight of national budgets. It will come into force next month.
The measures are aimed at preventing the next crisis by making sure that governments manage their budgets better in future. However, it is not expected to have much impact on sorting out the current debt crisis.