| 15.4°C Dublin

'Loch Ness Monster' tax back on agenda in Brussels today

Close

Finance Minister Michael Noonan. In the last Budget, the SARP programme was extended to 2017. Photo: Gareth Chaney Collins

Finance Minister Michael Noonan. In the last Budget, the SARP programme was extended to 2017. Photo: Gareth Chaney Collins

Collins Dublin, Gareth Chaney

Finance Minister Michael Noonan. In the last Budget, the SARP programme was extended to 2017. Photo: Gareth Chaney Collins

Finance Minister Michael Noonan travels to Brussels today for what looks like an interesting two days of talks following yesterday's Greek elections.

One of the issues up for discussion will be the old chestnut of a new transaction tax. Ireland, like the UK, is implacably opposed to the tax but other countries appear determined to push it forward.

France and Austria sought last Thursday to break deadlocked talks with nine other European countries over the financial transaction tax, by proposing that it be applied to a wide range of transactions but at low rates, from next year.

In a joint letter to their counterparts from the other countries, the French and Austrian finance ministers sought a new approach after months of failed attempts to tax fewer transactions that would have excluded most derivatives.

"We suggest resuming the work on a different footing to the approach that led to the negotiations hitting a wall in 2014," France's Michel Sapin and Austria's Hans-Joerg Schelling wrote in the letter seen by Reuters.

"This fresh direction would be based on the assumption that the tax should have the widest possible base and low rates," they said.

The tax, first proposed in the 1970s to penalise currency speculators, was seized on by France and Germany in 2012 as a political symbol to correct the excesses that were blamed for the worst financial crisis in a generation.

But talks have so far floundered over what transactions to tax and at what rate. Various countries tried to win exemptions for securities that would hit their financial institutions particularly hard.

Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain missed a year-end deadline for an outline of the tax. They struggled in particular to agree on what derivatives it should cover.

Mr Sapin said last year that one way through the impasse would be to start with a tax on shares and build up from there, adding derivatives later.

Others disagreed. Leaving out the opaque, complex instruments that were blamed for the 2008-2009 financial crisis could undermine the measure as a whole, they said.

The French and Austrian ministers, who want ministers to discuss this new approach when EU finance ministers in Brussels meet next week, suggested that one of the 11 ministers involved take charge of steering forward negotiations.

The European Commission originally said a tax on stocks, bonds and derivatives trades could raise up to €57bn a year if applied across all 28 European Union countries.

Britain has long opposed the tax for fear of driving business away from London, home of Europe's biggest financial sector.

Whether the new approach will be any more successful remains to be seen. One EU official said in December the tax was like the Loch Ness Monster: "Everyone's talking about it, but no one's ever seen it."

***********

Another interesting event this week will be the Irish Hotels Federation's 2015 Annual Conference, which begins today in the Slieve Russell Hotel in Ballyconnell, Co Cavan. More than 400 hotel and guesthouse owners are expected to attend.

While one can expect the usual complaints, it will be interesting to see what the hoteliers make of the rapid consolidation of their sector led by US venture capitalists and the sharp rise in visitor numbers.

Among the speakers will be Tourism Minister Michael Ring, former Ryanair executive and Failte Ireland chairman Michael Cawley, Central Bank board member Alan Ahearne, Google travel expert David Zammit and Kilkenny hurling manager Brian Cody.

An interesting mix!

Indo Farming