EU Finance Ministers To Examine Tax On Banks

by Ulrika Lomas, Tax-News.com, Brussels

22 January 2010

Spanish Finance Minister Elena Salgado, whose country currently holds the presidency of the European Union (EU), has announced that the proposal put forward by Sweden to introduce a tax on banks in Europe will be examined during an informal gathering of European Finance Ministers in April.

The aim of the tax is to establish a European stability fund as a provision for the future, Salgado explained. This fiscal initiative, along with any other proposals, will be discussed at the forthcoming meeting in Madrid, she revealed.

As proposed initially by Swedish Finance Minister Anders Borg, a European tax could be levied on banking performance. Given the enormous amount of financial aid accorded to the banks recently to support them during the crisis, Borg stated that it is totally unacceptable for banks not to pay the bill.

Indeed, Borg emphasized the huge benefits of such a tax. Sweden introduced a similar levy on its banks last year, and hopes to generate in the region of EUR7.4bn in tax revenue, which the government plans to use to finance a fund for overcoming any future financial crisis.

A tax levied on financial institutions would, Borg believes, enable European nations to consolidate their budgets.

This latest announcement follows hot on the heels of the decision taken by US President Barack Obama to impose a tax on Wall Street banks, designed to recover public funds used to stabilize the country’s financial system.

Germany’s Finance Minister, Wolfgang Schäuble, has shown that he is in favor of America’s plan, stating that it represents an “important proposal.”

Although Luxembourg’s Prime Minister and President of the Eurogroup, Jean-Claude Juncker, is also in favor of such a tax, he has nevertheless expressed his concern that the idea might be difficult to put into practice at European level, where a common approach is needed, as taxation stems from national decisions.

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