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Ecofin stuck on bank tax solutions

Ecofin stuck on bank tax solutions
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European finance ministers have given their go-ahead for a new body to supervise the finance industry which could be up and running next year.

Meeting in Brussels, they also agreed to share national budget plans on an EU level. The measures still need the EU parliament’s approval, although that is expected later this month.

But there are still differences over a tax on financial trading, with some countries like Sweden still firmly against. Anders Borg, Sweden’s finance minister, said:

‘‘We don’t want to see a new transaction tax. We think it could be detrimental to tax revenues and it could also bring a lot of the financial market activities out of Europe and that would be obviously something that would be bad for tax revenues. As we see it, a banking levy would be much more suitable.”

Borg has said that a previous Swedish attempt at a transaction tax in the 1990s just saw deals move to London.

France though is still open to the idea. French finance minister Christine Lagarde said:

“It is technically feasible, which is what the IMF has said. Practically it would be difficult. Politically it’s desirable, while financially it’s unpredictable.”

Governments are under public pressure to squeeze the banks, but without the rest of the world following suit, a levy on bank profits seems for now to be the more consensual option, although even then there are differences over what to do with the revenue.