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17 January 2014

Šemeta: "Don't hollow out financial transactions tax"

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In an interview with the Austrian newspaper Der Standard, Šemeta called on Member States not to dilute proposals for a financial transactions tax in the eurozone, suggesting the bloc could instead implement the plan more gradually.

Translated from the German

11 EU countries agreed in February 2013 on the introduction of a financial transaction tax (FTT). The project now seems to be dying a slow death: More and more exceptions to the tax are beind called for. If the FTT off the table?

The original proposal of the EU Commission was certainly the most comprehensive plan. We aimed for a broad base for a FTT that should encompass nearly all transactions with very few exceptions. The more exceptions there are, the easier it is to avoid the tax liability and to find creative loopholes. Some countries now express doubts about several elements: they want exceptions to the taxation of government bonds or repurchase transactions, or call for any transaction made by pension funds to be exempt. I am a realist: The necessary compromise will have to take into account the concerns of the Member States. And the European Commission will support them as long as no opportunities are created to circumvent the tax. But from a political perspective, the project is not dead: the FTT continues to be a priority for Germany and France.

France is now proposing to include only equity transactions, i.e. to introduce a stock market tax at EU level such as exists in France already. The big goal to make the financial industry participate in the crisis costs by contributing €35 billion would then not be achieved. 

My biggest concern is that the need for a compromise between the 11 countries means that loopholes will be created. Our proposal is to capture financial transactions with EU nexus abroad in order to avoid work-arounds. The worst scenario would be if the Member States were to agree on an FTT, but it ended up so incomplete that financial transactions were transferred abroad. The FTT must in any case be configured differently from existing share taxes: Simply to copy a country's system would not work at EU level. A possible solution would be to introduce some elements of the FTT at different times.

The EU wants to conclude an enhanced agreement with Switzerland on the exchange of tax-related information. A sticking point is whether Switzerland is prepared to share data of EU customers despite their banking secrecy. What is your goal in the negotiations?

I have always stated clearly that we want an agreement on the automatic exchange of information. Switzerland has signed a far-reaching agreement on bank data delivery with the US. If we consider that Switzerland is economically intertwined  much more closely with the EU, Bern should not be treating the EU worse than the United States.

Do you feel that Luxembourg and Austria are playing cat and mouse with the EU? The two countries keep upholding their banking secrecy and only want to change their position if and when Switzerland moves.

There is a clear commitment at the last EU Summit Declaration of the Heads of State and Governments in December according to which the revised Savings Directive is to be adopted until March. Luxembourg and Austria have supported this decision. The commitment is very clear.

The start of the automatic information exchange was planned for 2015. Would a later date be conceivable if there are further delays throughout the process?

Our proposal is for 2015, but the exact date will be decided in March. The whole thing can certainly not be postponed forever. The vast majority of EU countries is convinced that the EU has to be the elite in the implementation of automatic exchange of information. There is also no reason for fear. As I have said before: For Austrians with an account in Austria the banking secrecy can remain intact, it's all about cross-border cases.

Full interview (in German)

Further reporting © Reuters

© derStandard

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