More work need to be done to introduce bank levy: EU finance ministers

European Union (EU) finance ministers said on Tuesday that more work need to be done to introduce within the bloc a levy on banks and tax on financial transactions.

Belgian Finance Minister Didier Reynders told a press conference that "no unanimity at the moment" had been reached on the bank levy among the ministers who held their monthly meeting here, adding more work would be carried on before formal proposal was made on the issue.

European Commissioner for Internal Market and Services Michel Barnier stressed the importance of imposing bank levy within the bloc, saying "prevention costs less than cure."

He said taxpayers should be no longer in the frontline while bailing out the banking sector in a future crisis.

During the financial crisis, EU governments provided public support to financial institutions amounting to 16.5 percent of EU gross domestic product. The EU said that the aid was necessary to ensure stability of the financial system, but it imposed a heavy burden on taxpayers.

At a meeting on June 17, EU leaders agreed that member states should introduce systems of levies and taxes on financial institutions in orders to ensure fair burden-sharing and to set incentives to contain systemic risk in the financial sector.

A number of EU member states, such as Sweden, Germany and Hungary, have introduced levies on banks or are in the process of doing so.

The European Commission proposed in its non-paper to the ministers that there is a need for a coordinated approach at EU level and general principles should be agreed on in order to avoid competitive distortions between national markets and overlaps of levies on banks.

Besides levy on banks, the finance minister also discussed the possibility of imposing tax on financial transactions.

The European Commission put forward two options for the ministers to discuss. One is to impose a turnover tax that would be levied on organized financial markets and the other is to impose a tax applied on the sum of profit and remuneration of financial institutions.

European Commissioner for Taxation, Customs Union, Anti-Fraud and Audit Algirdas Semeta told the press conference that taxation was more controversial and more work need to be done to find possible solution to the problem.

Source: Xinhua