In the light of the financial crisis, policymakers are, rightly, looking for ways to tackle systemic risk in the global financial system in order to achieve financial stability. The crisis has led to international discussion and initiatives concerning the regulatory regime and, more recently, the taxation of the financial sector has moved up the agenda.
In particular, in September 2011, the European Commission adopted a proposal for a Financial Transaction Tax which was subsequently discussed in the Economic and Financial Affairs Council of the European Union (ECOFIN). The Commission proposed a broad-based FTT, taxing transactions in securities and derivatives. At the 22 June 2012 ECOFIN meeting, it became clear there was no unanimity on the Commission’s FTT proposal, but that a number of Member States had expressed support to move towards the use of enhanced cooperation (a procedure which would allow a group of Member States to proceed with a coordinated introduction of an FTT).
Following the 22 January 2013 ECOFIN – at which the Council adopted a decision authorising 11 Member States to proceed with the introduction of an FTT through enhanced cooperation – the Commission published the formal legislative proposal on 14 February 2013. The Commission proposal is largely based on its earlier draft of September 2011. Now that the Commission has issued its proposal, all 28 Member States may take part in the deliberations, but only those participating in the enhanced cooperation procedure will have voting rights.
At the December 2015 ECOFIN meeting, Estonia announced that it would leave the enhanced cooperation process, bringing the total number of participating Member States down to 10. Since then negotiations have continued until in June 2017 it was announced to postpone the negotiations to have more time to evaluate the impact of the Brexit negotiations. The next meeting of the EU10 Finance Ministers is expected to take place in October 2017.