The finance ministers of the 17 eurozone countries and of the wider European Union meet in Copenhagen tomorrow and Saturday (30-31 March) to debate the matter for the second time in three weeks, but an agreement to tax share dealings and other financial trades is increasingly unlikely.
Non-eurozone countries, particularly the UK and Sweden, have publicly opposed the plan for some time, and hopes that a eurozone-only tax could be introduced were dealt a blow at the last meeting of finance ministers, on 13 March, when the Netherlands also declared its opposition.
Although José Manuel Barroso, the president of the European Commission, has urged finance ministers to approve the plan, saying that it could halve member states' contributions to the EU budget, the Commission's arguments appear to be losing traction.
Wolfgang Schäuble, the finance minister of Germany, who has supported the idea, said on Monday (26 March) that the plan now had little chance of success.
“We just can't get it done,” he said, adding that member states should begin to look at alternative ways to raise money from the financial sector.
Schäuble had put his name to a joint letter from nine of the eurozone finance ministers, on 7 February, which called for a transaction tax to be introduced as soon as possible because they held a “strong belief” in its benefits.
Schäuble's Austrian counterpart, Maria Fekter, said on Tuesday (27 March) that finance ministers would look at other options and report back to their governments.
Officials from the Commission believe that there is still a chance that a group of countries might introduce a tax among themselves under the ‘enhanced co-operation' procedure.
The idea of an FTT, championed by France, was proposed in September by the Commission, which suggested a 0.1% levy on share dealings and 0.01% on the trading of other financial products, to bring in an estimated €57 billion.
Opponents, notably from the UK, where most of the EU's financial transactions take place, said that an EU-only tax would encourage financial services to leave the EU.
Hannes Swoboda, the Austrian leader of the centre-left group in the European Parliament, yesterday (28 March) sent a letter to Margrethe Vestager, the economics minister of Denmark, which holds the rotating presidency of the EU's Council of Ministers, urging her to keep the idea of a financial- transaction tax alive.
Describing Schäuble's remarks as “irritating”, he said: “Ahead of the meeting of finance ministers we need to have a coherent wording and a clear position in favour of the financial-transaction tax and against any means of tax evasion.”
? In addition to the debate on the transaction tax, finance ministers are under pressure to reach a decision on the lending capacity of the eurozone's rescue fund.
The question they will address is whether to continue to run the European Financial Stability Facility (EFSF), in parallel with the European Stability Mechanism (ESM), which was supposed to replace the EFSF from July.
An EU official said that an option to permanently combine the full lending power of both funds, to bring the firewall up to €940bn, had “not been met with unanimous enthusiasm”, but in light of Germany softening its stance would likely be above the current €500bn limit.