BERLIN (Reuters) - German government officials are playing down prospects for introducing a financial transaction tax in the near future after a member of the opposition Social Democrats (SPD) broke ranks and described the project as “rubbish”.
The SPD has been a driving force behind the tax, which would force the financial sector to contribute to the costs of future crises and has won the backing of 11 euro zone states.
But last week Nils Schmid, the SPD finance minister from the state of Baden-Wuerttemberg, said banks might not be able to cope with the additional burdens of the levy.
A senior government source told Reuters on Monday that without full SPD support, he expected the European decision-making process on the tax to slow down.
The source said the government still wanted to introduce the tax but added was taking objections to it seriously to avoid additional problems in the banking sector.
Finance Ministry spokesman Martin Kotthaus said the issues raised in Schmid’s letter would be discussed in Brussels.
“We will tackle the issue very thoroughly and carefully,” he said at a regular government news conference, adding that there must be a solution “that we can all live with”.
Kotthaus said it would be unrealistic to introduce the tax quickly and no revenues from the tax were planned in the 2014 budget. Until now 2014 has been cited as the start date.
In early May German Finance Minister Wolfgang Schaeuble said introducing the tax was not an urgent matter and could take a long time to be finalized.
The current plan it to set the tax at 0.1 percent for equities and at 0.01 percent for derivatives.
Reporting by Matthias Sobolewski; Writing by Michelle Martin; Editing by Noah Barkin