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Dublin: 11°C Tuesday 30 November 2021

MEPs clear way for 'opt out' on transaction tax feared by Noonan

A European Parliament committee allows countries to opt out of a transactions tax – a proposal Michael Noonan openly opposes.

Michael Noonan had openly opposed a system where the financial transaction tax did not apply to all member states.
Michael Noonan had openly opposed a system where the financial transaction tax did not apply to all member states.
Image: Niall Carson/PA Wire

MEMBERS OF the European Parliament have today voted in favour of a resolution which would see a financial transactions tax rolled out in some, but not all, EU member states – a move likely to be opposed by the Irish government.

The parliament’s committee on economic and monetary affairs adopted a resolution approving the European Commission’s proposal to roll out a financial transactions tax throughout the EU.

In the absence of full agreement between all 27 member states, however, the committee included an amendment which allowed the process to be “accelerated”.

“Certain Member States could adopt the provisions of this Directive by way of enhanced cooperation,” the MEPs’ resolution said – essentially outlining a system, similar to that being used for the Fiscal Compact, where individual states can group together to apply the tax.

This goes directly against the wishes of Michael Noonan, who earlier this year said Ireland risked losing financial business to the UK if the tax was not rolled out on an EU-wide basis.

“If, as some countries have proposed, the tax was to be brought in under enhanced co-operation arrangements, we would fear we could lose business to London, since the UK is strongly opposed to this initiative,” Noonan said in February.

The opt-out clause was inserted following pressure from Cyprus and Sweden, who had complained that plans to roll out an EU-wide tax were in breach of the principles of subsidiarity. The UK and Germany have both expressed opposition to the tax too.

The text adopted by MEPs – by 30 votes to 11 – adds details of an “issuance principle” which would see financial institutions outside of the taxed area still pay the tax, provided that the transactions related to assets within the taxed area.

So, for example, shares in an Irish company being traded between parties in the US and Australia, for example, would be liable for the tax.

Following pressure from MEPs from across Europe’s geographical and political divides, pension funds will be exempted from the plans.

The resolution will now go forward to the plenary session of the parliament where it will voted upon by the full chamber of 754 MEPs.

The European Parliament estimates that the tax – sometimes called the Tobin Tax, after economist James Tobin who first suggested it – could raise €57 billion every year.

Figures produced by the European Commission last month suggested a tax could ultimately halve the amount Ireland contributes to the EU budget – to €534 million – by 2020.

About the author:

Gavan Reilly

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