Michael Noonan (Limerick City, Fine Gael)

The European Commission last week published its proposal for a financial transactions tax, or FTT. It also published its impact analysis to accompany this.

We will analyse the detailed proposals in the draft directive. The draft directive will now be subject to detailed discussions at EU level and, as always, we will participate constructively in those discussions. There is no consensus as yet among European member states on this issue, either about whether a financial transaction tax should be introduced or what precise form it should take.

It is important that any proposal does not have the effect of encouraging relocation of activity or damaging the EU's competitiveness in financial services. It is for this reason that there is an emerging view that the EU and other international groupings, such as the IMF and G20, should move in tandem in a global manner to avoid the danger of financial sector business gravitating to jurisdictions where taxes are not levied on financial transactions. The Commission has indicted that it sees its proposal as part of a wider development in this area.

Any tax would be best applied on a wide international basis to include the major financial centres. I also think it important that the proposed directive would apply on an EU wide basis to prevent any distortion of activity within the European Union.

The Commission is proposing that the FTT should be an "own resource" tax imposed centrally to fund the EU and will develop proposals in the context of the future of the EU budget. However, we will need to assess the impact of this on our contribution vis-À-vis any system based on gross national income, as is the current system.

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