GERMAN CHANCELLOR Angela Merkel’s junior coalition partner, the Free Democrats (FDP), has said proposals to introduce a financial transaction tax in the euro zone are unworkable.
The proposal, last floated by French president Nicolas Sarkozy on Monday in Berlin, was given tacit approval by Dr Merkel, to the consternation of her junior partner. Her economics minister, FDP leader Philip Rösler, insisted that the chancellor “spoke only as a private person”.
“I’m sticking to the position of the government that we support the European Commission view: if there is to be such a tax, then [it should be] implemented at EU level in all 27 countries,” said Mr Rösler.
Senior FDP figures are determined not to increase the tax burden on businesses while in office. Any policy shift in that direction would, they warned yesterday, “hit the coalition at its very core”.
“The FDP is not going to go along with a tax that would drive away financial services from regulated to unregulated markets,” said Dr Volker Wissing, FDP finance market spokesman. “As long as this relocation problem is not solved, the FDP will not back such a tax and remains interested in bringing Britain on board.” London has said it is uninterested in introducing such a levy, triggering concerns in Dublin and elsewhere that a euro zone-only tax would place native financial services industries at a disadvantage.
Chancellor Merkel’s Christian Democratic Union (CDU) said a decision on how to implement such a levy would have to be made soon.
“If we don’t get agreement on a tax with 27 EU states then we need an alternative and will implement a tax, if necessary, in the euro zone 17,” said CDU Bundestag leader Peter Altmaier.
Senior CDU officials were unimpressed by the FDP’s indignation, describing it as inappropriate for a party struggling for its life with just 2 per cent support in polls. It was a view shared by Germany’s opposition.
“We’ve always fought for such a tax and Dr Merkel cannot allow this to fail now thanks to a 2 per cent political party,” said Cem Özdemir, co-leader of the Green Party.
The FDP is divided over the idea of a euro zone-only tax. Senior party member Wolfgang Kubicki, facing a state election in Schleswig-Holstein in May, urged the FDP not to pick a row with its partner.
“We would be fighting on the wrong front if we tried to stop the tax,” he said.