| Open Europe |
Europe
New Open Europe briefing examines the details and cost of 10 potential EU-level taxes
In a new briefing published today, Open Europe examines ten options for introducing EU taxes, concluding that while some come with minor benefits, they are all unworkable in practice. Many of the options would place a disproportionate burden on certain member states, while others, if linked to the EU budget, would simply add to the budget’s complexity rather than reduce it.
The report estimates that a financial transaction tax (FTT), as proposed earlier this week by Germany and France, could cost financial markets across the EU between €24.3 billion and €80.9 billion, with the UK financial markets absorbing between €17.5 billion and €58.2 billion (£15bn and £49.9bn) of that cost, using the Commission’s rate of 0.1% for bonds and shares and 0.01% for derivatives and without a burden-sharing system. A large part of these costs would be passed on to consumers.
Meanwhile, FTD reports that FDP leader Philipp Rösler has told Stuttgarter Zeitung that the financial transaction tax will only be acceptable if also applied to the UK. The Commission announced yesterday that it will put forward a formal proposal on a financial transaction tax in October, reports El Pais.
European bank shares plunge on recession fears and eurozone worries;
Creditor countries’ demand for collateral threatens to derail second Greek bailout
Global stock markets plunged yesterday and the flight to safe assets resumed on the back of fears over a slowdown in economic growth and the on-going eurozone crisis. Italian and French bank shares were particularly hard hit again, with the sell off continuing this morning, due to growing fears over their access to funding and diminishing faith in the ability of eurozone leaders to find a lasting solution to the crisis, according to the WSJ. The cost of borrowing for Italy and Spain did not rise substantially, suggesting the ECB is continuing to purchase their bonds.
The second Greek bailout faced a further setback yesterday, with Austria, Slovakia, Slovenia and the Netherlands suggesting that they may also request collateral guarantees for their share of the bailout loans after Greece agreed to give such guarantees to Finland. Ivan Miklos, Slovakian Finance Minister said, “I consider it unacceptable for any country not to have collateral when other countries have it”, adding, “Because if this is a loan, and that is what everyone is calling it, the debtor should have no problem offering collateral for the loan.” Such demands threaten to derail the whole package as Greece is unlikely to be able to afford to offer guarantees to numerous states. Open Europe’s Pieter Cleppe is quoted by CNBC, Washington Post, Fox News, Forbes and several European papers and news sites, noting that “a message is being sent to countries [that] if you have a euro-sceptic vote, you are actually being rewarded for it."
Reuters reports that the Greek Finance Minister Evangelos Venizelos told the Greek cabinet yesterday that an additional €3bn-€4bn in cuts may be needed to account for the larger than expected recession, which has resulted in lower than expected tax revenues. The FT reports that the passage of the Italian austerity package through the Italian parliament could face significant delays due to a large number of amendments being proposed.
In an interview with the FT, Belgian Finance Minister Didier Reynders put his weight behind the campaign for Eurobonds, saying, “If it is possible to have rules in national constitutions about balanced budgets, and to have real economic integration, then I am sure it will be possible to have Eurobonds.” Handelsblatt reports that ECB Chief Economist Juergen Stark warned against Eurobonds saying, “The incentive to tackle structural problems in budgets is reduced” with Eurobonds, adding that they address “the symptoms and not the causes”.
CNCB FT CityAM IHT Guardian Evening Standard El Pais Irish Times 2 Irish Times 3 Independent WSJ WSJ 2 WSJ 3 FT 2 WP Le Monde Le Soir Le Figaro EurActiv European Voice FT 3 CityAM 2 Reuters Kathimerini IHT 2 HS FT 4 FT 5 CityAM 3 Irish Times FoxNews Yahoo!News SAPO Spravy.pravda E15 KLFY La Stampa: Rusconi Independent: O’Grady El Pais 2 Times: Rees-Mogg Times: King El Pais: Uria WSJ: Mattich WSJ: Forelle CityAM: Crow Economist Economist Irish Times: Scally Economist 3 FT: Peel Economist Economist 2 Irish Times: Scally
New on the Open Europe blog
Contrary to some claims, Germany has no interest in an economic colonisation of the EU: German lessons
The Greek-Finnish deal on collateral guarantees threatens Greek bailout and shows why national democracy is still king: Collateral damage
Posts
