Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He was worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.
Well, they’ve done it. After months of wrangling, the EU Commission is pressing ahead with the Financial Transaction Tax.
Brussels has decided to use "enhanced co-operation" to attempt to push the policy through. So that means ten EU states – France, Germany, Italy, Spain, Austria, Belgium, Greece, Portugal, Slovakia and Slovenia are going to press ahead with the plan.
This time the United Kingdom has not been alone in its fight. It is no longer the only voice in the room. It has support from the Netherlands, Sweden, Malta, the Czech Republic, Luxembourg, Ireland, Cyprus, Finland, Denmark, Latvia and Bulgaria – against the tax. What we don’t know yet is if whether the tax will just apply to activity taking place within these countries or if it will have wider – known as extra-territorial – application across all 27 EU member states. Keep an eye out for this.
The initial Commission document proposing the FTT showed EU policymakers were keen to apply the tax across the EU – and in that regard to capture London – by far the EU’s biggest financial market. So how can the EU press ahead with the idea? Well here’s how. An application to proceed with the FTT under the “enhanced cooperation” procedure can be successful if:
- At least 9 out of 27 Member States want to move forward under enhanced cooperation;
- 14 out of 27 Member States vote in favour; and
- The combined number of votes of these 14 countries is at least 255 out of 345 votes.
So those ten member states have now confirmed their willingness to move forward under enhanced cooperation. The Commission should receive support from up to 11 countries representing around 175 votes. We wait for Estonia to make its mind up. This means that for enhanced cooperation (255 votes) there is a shortfall of 80 votes and at least three other Member States are required.
Based on recent statements from the EU's 27 finance ministers, the shortfall is met – given that five other member states have indicated they will vote in favour of the bid for enhanced cooperation. These are:
- the UK (29 votes)!!!!!!!;
- Poland (27 votes);
- Hungary (12 votes)
- Czech Republic (12 votes)
- Malta (3 votes)
These five countries together represent 83 votes, meaning that the threshold for enhanced cooperation of 255 votes would be met. The Cypriot Presidency has confirmed that the vote will take place on 13 November at the ECOFIN meeting of Finance Ministers.
It is important to note that these positions may change as progress on the FTT is dependent on progress on other policy issues. There are three possible developments:
- The negotiations on the long-term budget which could in particular impact on the British position;
- The negotiations around Irish debt relief and legacy assets could change the Irish position; and
- The possible development of a special Eurozone-only budget in addition to the wider EU27 budget, which could lead to difficulties in the redistribution of the proceeds of the FTT. This could alter the positions of, notably, Ireland and Malta.
The question now for the UK is – will it vote for enhanced co-operation? Over to you, Mr Chancellor.