The Irish Independent reports that the ultimate cost of the European Union's planned €35bn financial transaction tax will be borne by ordinary citizens and taxpayers and its effects will harm small and medium-sized businesses, the International Banking Federation (IBFed) has warned Finance Minister Michael Noonan.
The IBFed has written to Mr Noonan in his capacity as president of the EU's Ecofin council, spelling out what it believes are the dangers of the controversial financial transactions tax (FTT) that is due to come into force next year.
Although Ireland is not one of the 11 EU member states that is introducing the divisive FTT, it is responsible, as the holder of the EU presidency, for its implementation.
Plans for an EU-wide FTT were ditched last year when it became clear that some countries had deep reservations about the proposals. There were concerns that the tax could result in financial firms leaving the International Financial Services Centre in Dublin or reducing their activities there.
But the EU is enabling member states that do want to introduce the tax to do so under the so-called "enhanced co-operation" procedure.
That allows a proposal to be adopted by a minimum of nine member states, even if other members don't plan to do so. The countries that have signed up to the FTT plan are Germany, France, Italy, Spain, Portugal, Slovenia, Estonia, Belgium, Greece, Austria and Slovakia.
The European Commission reckons that the tax will raise between €30bn and €35bn a year from the 11 countries that do plan to implement it from next February. Eligible financial transactions – such as the purchase of sale of assets including shares, securities, bonds and derivatives – will be subject to the tax where at least one party in the transaction is based in a member state that's participating in the FTT. Research
"Numerous governments, independent research studies, financial market experts, tax experts, and prominent market commentators have all expressed their concerns over an FTT and identified its many shortcomings," the head of the IBFed, Sally Scutt, has told Mr Noonan.
"The IBFed is worried that the EC and some EU member states fail to understand that the reluctance of a majority of EU member states to participate in the FTT proposal is due to their negative assessment of its merits," she added.
The IBFed said that continuing to pursue the FTT in such circumstances has resulted in a design that "makes a bad tax even worse".
Last week, the UK government launched a legal challenge to the FTT.
The Irish Independent also reports that Taoiseach Enda Kenny and Spanish Prime Minister Mariano Rajoy have both said the European Union faces a "test of credibility" in ensuring it follows through on its promise to break the link between sovereign and bank debt.
Both leaders said agreement on banking union – a key step in using European funds to directly capitalise banks – is crucial, and it is due to be discussed at an EU summit in June.
It would be the first step towards taking a stake in Irish banks, if the Government manages to secure such a deal. And using the European Stability Mechanism (ESM) for capitalising banks may also be required if Spain needs to further stabilise its beleaguered financial sector.
Mr Kenny and Mr Rajoy met at the Alhambra Palace complex in Granada, Spain, yesterday as part of Ireland's EU presidency.
The Taoiseach said he was also there to "show solidarity" with Mr Rajoy and the Spanish people as they face their own economic difficulties. Mr Kenny will also meet Portuguese leader Pedro Passos Coelho today.
Mr Kenny said the decision of EU leaders at the European Council last June to break the link between sovereign and bank debt still stands.
Tanaiste Eamon Gilmore described it as a "game changer" at the time, but some leaders, such as German Chancellor Angela Merkel, have since poured cold water on the idea of refunding Irish taxpayers for money they have already poured into the banks.
Mr Kenny said that banking union is of "immense importance to the future of the union itself".
Mr Rajoy added that getting agreement on banking union is a "test of credibility for the EU".
The Irish Times reports that the role of small- and medium-sized enterprises in Europe will be discussed at a
meeting of MPs and MEPs in Dublin this morning.
“If the EU and Ireland are to deliver on the Europe 2020 priorities of smart,
sustainable and inclusive growth, competitiveness needs to be centre stage.”
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