Wednesday 20 November 2019

Noonan lukewarn on financial transaction tax proposal by EU

Sarah Collins in Brussels

Attempts to introduce an EU-wide financial-transaction tax have been met with caution by Finance Minister Michael Noonan after Britain indicated it would veto the move.

The EU said yesterday that financial firms should be charged a minimum of 0.01pc on all derivatives products and 0.1pc on bond and share trades from 2014 in order to claw back some of the €4.6trn that has been ploughed into the sector since the start of the crisis.

European tax chief Algirdas Semeta says the levy could raise up to €57bn a year for strapped public purses if applied to transactions carried out by the over 8,800 banks, investment firms, hedge funds, insurance companies and traders based within the 27-member EU.

It would not apply to governments, central banks or ordinary savers -- unless they invest in shares and bonds -- and spot- currency transactions would be exempt.

A UK government spokesman said yesterday that while it had no objection to the tax in principle, "it would have to apply globally", effectively scotching a Europe-wide charge.

Any new tax laws have to have the unanimous support of all EU members in order to to passed.

Ireland is a major centre for funds administration, with more than 1,100 financial firms operating out of the IFSC.

Mr Noonan said he had "concerns about any tax that would distort the market".

"We can't have a situation where there is a transaction tax in Dublin and there is no transaction tax in London," he said.

The position marks a turnaround from last year, when Brussels favoured a levy on banks' profits and pay rather than transactions.

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