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Belgium Airs Doubts About EU Financial Transactions Tax

by Ulrika Lomas,, Brussels

25 January 2016

Belgium could pull out of the coalition of European Union member states working on proposals to tax financial transactions, comments from Belgian Finance Minister Johan Van Overtveldt suggest.

Belgian media reported over the weekend that while the Government has not yet decided to leave the financial transactions tax (FTT) negotiating table, it is unhappy that the outline of the tax's structure agreed by the participating member states in December has moved too far away from the original proposals, which it initially supported.

In his comments, Van Overtveldt said that the FTT, as proposed, could drive up the cost of sovereign debt, hit pension funds, discourage hedging transactions and damage the economy. At the same time, Van Overtveldt is worried that the tax would not have an impact on the sort of risky trading activity that was thought to have played a large part in precipitating the global financial crisis.

"Belgium will not leave the negotiating table at this point, but we cannot deny that the draft texts that exist today are unacceptable," he was quoted as saying by the Belga news agency.

Eurozone finance ministers agreed to a basic framework for the FTT on December 8 but decided to give themselves an additional six months to negotiate. However, achieving a consensus on the technical design of the tax has been problematic from the beginning.

Since most member states were opposed to the European Commission's proposals, only 11 member states agreed to proceed with the tax on the basis of enhanced cooperation. These states included Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia, and Slovakia. However, several deadlines have been missed for a final agreement on the tax. The FTT 11 were supposed to have concluded an agreement by this time last year, time for the introduction of the transactions tax in 2016. Last year, the deadline was reset to December 2015 but this was also missed. What's more, Estonia refused to back the framework agreement at the December meeting of eurozone finance ministers.

TAGS: Finance | tax | European Commission | Belgium | Portugal | Slovenia | Estonia | Slovakia | Austria | France | Germany | Greece | Italy | Spain | Europe | Tax | Financial Transactions Tax (FTT)

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