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German minister moots EU stamp tax

Friday 20 January 2012 - by

Germany could be set for an about-turn on the mooted European financial transaction tax by choosing instead to back a UK-style stamp duty on share purchases.

In an interview with a German newspaper the federal minister for economics, Philipp Roesler, admitted that a uniform stamp duty across Europe could be a way to garner support from the UK, which has been a vehement critic of the FTT.

Germany has a "special interest" in having Britain involved in any deal to impose taxes across the EU, as this would ensure traders hit by a eurozone-wide tax would not shift their business to London, Roesler told the Rheinische Post paper in an interview published on Friday.

German Chancellor Angela Merkel, in tandem with French President Nicolas Sarkozy, have staunchly supported an EU-wide FTT as a way to tax the financial sector following the financial crisis. Under European Commission proposals, a 0.1 per cent tax would be imposed on equity and bond transactions, with a 0.01 levy enacted on derivatives trades.

However the UK has argued that the EU-wide FTT would hit London the hardest, given its status as the EU's largest financial centre. Chancellor George Osborne says that the tax would lead to a withdrawal of trade so significant that it overrides any benefits of introducing the tax.

The UK's stamp duty imposes a 0.5 per cent levy on certain share purchases and marketable securities, raising the country approximately €3.6bn ($4.6bn) a year.

"We should think about whether or not there is a way to get Britain on board," Roelser told the paper. "The British have a particular form of stock transfer tax, the so-called stamp duty.

"If the British were not able to approach the European model of the financial transaction tax, then it makes sense to speak together with the British and other European countries on the British model."

However, Roesler did not say if Germany would seek to increase the size of the stamp duty, or if it would simply propose copying the tax across Europe.

"We must prevent one-sided competition disadvantages for Germany as a financial location and at the cost of customers," he added.

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