Ireland to remain outside financial tax group - Michael Noonan

Friday 22 June 2012 23.42
Ireland is concerned that banks could leave the IFSC for London if a financial transactions tax is brought in
Ireland is concerned that banks could leave the IFSC for London if a financial transactions tax is brought in

The Minister for Finance has said Ireland will not be part of a core group of EU countries implementing a financial transaction tax as long as the UK remains outside the group.

Speaking in Luxembourg, Michael Noonan said nine countries had agreed to forge ahead to apply a financial transaction tax, and most of the remaining 18 countries had decided not to block the idea.

A financial transaction tax is the price German opposition MPs extracted from Chancellor Angela Merkel in order to support the fiscal compact in a Bundestag vote next week.

Mr Noonan said: "We have stamp duty on share transactions at 1% - we don't want to go beyond that at present. The British aren't prepared to go beyond that, Luxembourg isn't prepared to go beyond that.

"The risk of the activities in financial services moving from Ireland to other centres, particularly London, Luxembourg, the Netherlands is quite high".

One idea behind the financial transaction tax, which is also supported by France, is that it could create a fund to cushion taxpayers from having to bailout banks.

Under the enhanced co-operation procedure a financial transaction tax can go ahead among a core group of countries, but only if there is no impact on the internal market and if it does not adversely affect other countries which are not involved.

Under today's procedure the nine countries involved have asked the European Commission to bring forward proposals on how such a financial transaction tax might work among a core group of countries.

Mr Noonan also said the European Investment Bank had agreed to relax the collateral rules allowing the Government and the private sector to access fresh funding which is expected to be announced as part of a package of European growth measures to be agreed at next week's summit of EU leaders.

EU leaders are expected to increase the capital of the EIB by €10 billion, which in turn could leverage the EIB's lending capacity to up to €60bn, which would be spent on infrastructure projects.

Ireland’s access to EIB is limited because as a triple A-rated bank it requires certain collateral rules.

But Mr Noonan said the EIB president had agreed to look at ways of relaxing those rules to access more funding.

Projects which could be earmarked for funding post summit could include the Dublin-Wexford road, the Tuam-Gort road, with funding for new schools and community health centres, Mr Noonan told reporters.

"At present the EIB are under-committed to Ireland, so there's cope for improvement."

Agreement on growth boost for EU

Meanwhile, the leaders of Germany, France, Italy and Spain agreed on Friday on a €130bn package to try to revive economic growth in Europe but differed over whether and how to launch joint bonds to combat the eurozone's debt crisis.

After a four-way summit in Rome, Italian Prime Minister Mario Monti said the EU should adopt a series of growth measures worth about 1% of the region's gross domestic product at a summit next week.

The growth measures, already in the works in Brussels, include increasing the European Investment Bank's capital, redirecting unspent EU regional funds and launching project bonds to co-finance major public investment programmes.

German Chancellor Angela Merkel, who leads Europe's most powerful economy and the main contributor to its rescue funds, endorsed the growth package but made no mention of any move towards mutualising past eurozone debt or new borrowing.

French President Francois Hollande appeared to voice impatience with Berlin's reluctance, saying it should not take 10 years to create jointly underwritten euro bonds.

He said greater solidarity was needed among member states before they abandon more sovereignty to EU institutions.

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