26 January 2016

POLITICO: Belgium gets cold feet on financial transaction tax

Differences within Belgium’s ruling coalition over a European financial transaction tax cast further doubt on the proposal, which is championed by a group of 10 EU states but opposed by the financial industry.

Finance Minister Johan Van Overtveldt exposed the split by saying last week he would “investigate in the coming weeks or months how to put a stop to this tax” because it threatens the economy and the financial sector.

This contradicted the official position of the coalition government headed by Prime Minister Charles Michel from the liberal, French-speaking Reformist Movement (MR). He now plans to underline Belgium’s support for the so-called “Tobin tax” in parliament on Tuesday morning.

“The government will stick to the principles as agreed in the coalition agreement,” Michel’s spokesperson said.

That deal, struck in 2014,  states that “Belgium will continue to work constructively on a gradual introduction of a financial transaction tax,” but clarifies that it should focus on share- and derivative-trading while leaving the real economy untouched and not affecting pension funds and insurance companies.

However, a spokesperson for Overtveldt — who is from the Flemish nationalist N-VA — underlined his party’s “reservations concerning the impact of the tax on the real economy, for instance on pension funds.”

The finance minister is eyeing exemptions from the tax to prevent it from discouraging Belgian investors and businesses from taking risks with their capital. [...]

Belgian cabinet ministers are expected to discuss the financial transaction tax on Friday. In order for Belgium to withdraw from the Tobin tax entirely, Van Overtveldt and the N-VA would have to convince the three other parties in the governing coalition. [...]

Belgium has not notified the Commission of any intention to withdraw, according to Commission spokesperson Vanessa Mock, who descried the country as “a very supportive presence throughout the negotiation process.”

Full article on POLITICO

© POLITICO