The European Union's plans for a Financial Transaction Tax (FTT) have been under discussion for five years but a lack of consensus from member states has so far halted progress. Will there be a breakthrough at October talks?

Will discussions be completed by the end of this year?

Despite years of disagreement and delay, European Commissioner Pierre Moscovici has said he hopes to see the discussions completed by the end of this year. Discussions between the 10 member states still committed to the project will recommence on 11 October. Finance ministers from Germany, France, Italy, Austria, Belgium, Greece, Portugal, Slovakia, Slovenia and Spain will attend the talks, the aim of which will be to agree on a common tax base.

Hans Joerg Schelling, Austria's finance minister, who is leading discussions on the FTT, say there is pressure on the remaining 10 financial ministers to make demonstrative progress on the issue next month. He was quoted by news site Euractiv as saying: “The Financial Transaction Tax has the full support of the Commission, which is crusading for an EU business tax and plans to propose a directive in early November on the creation of a common consolidated corporate tax base (CCCTB).”

The FTT could raise taxes of €22 billion per year, according to Commission. However, there are two main sticking points that need to be discussed and agreed by the group: the treatment of derivatives on sovereign debt and how to make the tax cost-effective.

Schelling fears countries will withdraw support for FTT

Although an effective EU-wide tax will require agreement and support from all EU countries, the current talks are being held according to the 'enhanced cooperation' model, to enable the launch of the project supported by at least nine member states. It remains to be seen whether the 10 countries still at the negotiating table can work together. Schelling seemed doubtful and was quoted by Bloomberg saying: “We’re no longer 11. Whether we’re still 10 is something we don’t know for sure.”

And Bloomberg also reported that several of the 10 negotiating member states have serious misgivings and could withdraw from the enhanced cooperation group: “Belgium’s finance minister, Johan Van Overtveldt, has said he’s opposed to the tax and is trying to convince his coalition partners to withdraw. Slovenia and Slovakia are also seen as potential dropouts, according to two European officials close to the talks.”

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CTMfile take: The prospect of negotiations on the FTT being competed by the end of this year - assuming that at least nine countries continue to back the initiative at the 11 October talks - seems to be highly unlikely. At least, the danger is that discussions will come to an end – but not in the way Moscovici is hoping.