1. Financial Transaction Tax
Update on the state of the play in the EU
by end of August 2012
1. The way for the FTT in the framework of Enhanced Cooperation1 is free after the official
statement in the European Council (end of June) that an FTT in the EU-27 would not be
possible, and the process has been started.
2. The German Government is playing an active and leading role to promote the process.
As a sign of their seriousness one can take the fact that in the draft budget for 2013 they
have already put the costs for the technical handling of the tax.
The revenues are not in the budget for 2013, as it is sure, that the time is too short to im-
plement the FTT within the coming four months, But the revenues turn up again in the draft
budget for 2014.
The figure of 2 bn Euro is very conservative as it is the culture in the budget committee.
They are already preparing a respective change in the German laws, which regulates the
internal administration of the tax (this is obligatory).
They also favor the proposal of the Commission and are not for a tax similar to the unilateral
one in France.
3. The quorum of nine countries should be reached with France, Italy, Spain, Austria, Bel-
gium, Portugal, Greece, Finland and Germany. The German government expects more
countries to join, once the process is triggered. With the elections in the Netherlands
in September, the country might also change if the center-left will win, an outcome which is
predicted at present by the opinion polls.
4. The Commission is fully supportive for the process.
5. All this is a very positive and important step forward. Deciding to start the process
of Enhanced Cooperation creates a certain obligation and path dependency, although final
implementation might still take some time.
6. This has to do with the complexity of the procedures for Enhanced Cooperation, which
look as follows:
a. by the end of August, beginning September an official letter by the nine (or more) will be
sent to the Commission. In some countries the parliament has to be involved, if a country is
involving in Enhanced Cooperation, in others (such as Germany, this is not the case).
The letter is a political letter of maximum two pages without technical details, but referring to
the draft directive of the Commission as a starting point, i.e. broad tax base with derivatives
included, measures against tax evasion etc.
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1
This is a procedure where less than the 27 members of the EU but at least nine can implement a common project –
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a kind of “coalition of the willing” – which is covered by European law.

2. b. in the next step, the European Parliament has to agree. As there were already several
decisions in the favor of the tax, there is the high probability that there will be support.
c. Then the Council has to decide by qualified majority.
This means:
- a majority of 255 votes from 345 (= 73,9%) is necessary. As a reminder: the big countries
(UK, D, F, I) have 29 votes each, Spain and Poland 27, Belgium 12 and so on until the
smallest with 3 votes for Malta.
- 62% of the population have to be represented
If these criteria are not met, the proposal fails.
Sweden, which is against the FTT might nevertheless allow the project without participating
itself. Others might also do this. The UK will probably vote against. Ireland will have to ab-
stain as long as it has the presidency.
The vote in the Council is expected in the next six months.
d. If the vote in the Council is successful, the Commission gets involved and makes a pro-
posal, which will be more or less the same as the present draft directive.
e. Then the countries which participate in the Enhanced Cooperation start to negotiate the
details. The others are allowed as observers.
7. There might also be other obstacle coming from outside. If for instance the German Sup-
reme Court vetoes the so called Fiscal Pact in September, this could put the FTT into ques-
tion, as it is part of a major deal in the German government, which then might collapse.
8. Positive synergy could come from other reform projects such as MIFID (Markets in Finan-
cial Instruments Directive) or EMIR (European Market Infrastructure Regulation). For in-
stance would the establishment of a trade register for derivatives facilitate their taxation.
9. The issue of the use of revenues will not turn up at all in the entire official process.
Conclusion for civil society
As you can see, in spite of the considerable progress, there are still some critical stages and
traps where the project can be stopped or watered down.
In particular, those countries, which do not want to participate should be pressurized to allow
the others to implement the FTT.
We therefore cannot lean back, but have to accompany the process with continuous pres-
sure.
A detailed strategy would have to be worked out soon.
Berlin, August 30th 2012
Peter Wahl
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