The Financial Transaction Tax: Forerunner of European Integration and Fragmentation
Eleven EU member states are pushing ahead with the Financial Transaction Tax via the enhanced cooperation procedure. Only three years ago it was deemed as a mission impossible, but now it seems as the FTT will actually be introduced in the coming year(s). It will have extensive consequences , for member state economies, but also for European integration and EU unity in the long run.
Implementing the FTT
The FTT will probably result in a complex system with many compensatory measures which will have a large impact on participants and non-participants in terms of relocation of financial institution, tax collection etc. The implementation of a well-functioning system calls for a broader base of partakers in- and outside the EU.
Lasting EU fragmentation
As it seems the FTT is just one example of fragmentation between member states in the EU. The durability of opt-outs, unwillingness to join, possible participation of non-member states, and the development of instruments such as the enhanced cooperation procedure display a lasting character of differentiated integration in the EU, which makes it a timely subject for debate.
A new approach towards differentiated integration
There is a more widespread trend that member states only apply policies that are potentially beneficial. This also questions the current way of thinking on the potential negative consequences of opting out. It might even lead to positive consequences in the form of more democratic legitimacy.
Read the complete analysis of the Financial Transaction Tax from a European integration perspective.