Business News

Minister Defends New Financial Taxes

Luxembourg, 09 October (STA) - Finance Minister Janez Šušteršič commented in Luxembourg on Tuesday on the debate regarding the new taxes the Slovenian government plans to introduce, saying that the financial sector must carry a part of the burden of the crisis.

As the idea of an EU-wide financial transactions tax was backed by eleven EU members at today's meeting of EU finance ministers, according to sources, Šušteršič commented on the relation between the new European tax and the tax the Slovenian government plans to introduce for financial services.

He explained that the government had promised to trade unions in the talks on the act on the balancing of the public finances that a part of the financial burden for the crisis would also be placed on the financial sector and that it took some time for it to come up with a solution.

Europe offers different solutions - the directive on the European tax on financial transactions that is being drawn up envisages taxes that are aimed foremost at stock markets and financial markets, he said.

Slovenia has backed the so-called enhanced cooperation in the introduction of this tax, which is why the government decided it would not make sense to introduce such a tax a year or two earlier, especially since it would not contribute very much to the budget, given that Slovenia is a small country and that its financial markets are not that developed.

Subsequently, the government proposed increasing the tax on banks assets, but this was met with criticism from the banking sector and some international institutions although similar solutions have been introduced by for example the UK and Germany, the minister said.

This is why the government finally decided for the kind of tax that is levied in the insurance sector, where a 6.5% tax is levied on commission on insurance service payments.

The same solution will not be introduced for all other commissions in the financial sector.

Responding to the resistance that the planned move has provoked, he said he was glad to see that people oppose every new tax, because "I also think that raising taxes is not the way to solve public finances".

But he stated that merely cutting expenditure would simply not do.

The EU ministers also discussed today the setting up of a unified European system of surveillance over banks, which Slovenia believes should be implemented as soon as possible.

The move is important for Slovenia also because the setting up of this system is one of the conditions for direct recapitalisation of banks from the European Stability Mechanism (ESM), Šušteršič said.

He believes the initial phase of the project could be launched on 1 January 2013, as the European Commission has proposed. In line with the proposal, the European Central Bank would exercise surveillance over the problematic banks from January on, all systemic banks from July on and all 6,000 banks in the eurozone from January 2014.

Launching the project in January would have a symbolic meaning, as European leaders committed in June to hurry up with the project. "If nothing happens on 1 January this will be a big disappointment," the minister said.

He added that most EU members supported this "ambitious plan" but that there were still many open issues. The issue is to top the agenda at the EU summit on 18 and 19 October.

The unified European surveillance over eurozone banks is considered the foundation for the banking union, which is one of the four pillars of the new strategy for enhancing the European integration. The other three are a fiscal union, and the enhancing of economic and political unions.

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