Transaction tax does not find Frieden's approval

(CS) Finance minister Luc Frieden said on Wednesday that a financial transaction tax would be risky if not adopted by all major financial centres and warns of a difficult 2012.

While conceding that the Luxembourg government has not yet finalised a position on the financial transaction tax, Frieden said he was hesitant to introduce such a tax if it was only valid in few countries, as the financial services industry was very mobile and easily transferrable.

Speaking at a British Chamber of Commerce lunch event on Wednesday, Frieden emphasised that the was not taking this stance to protect the Luxembourg financial sector, but that of the EU as a whole, as major financial centres, including New York and Hong Kong, said they were not ready to introduce such a tax.

However, the finance minister left room for negotiation, saying that there are elements that need to be cleared up, such as the question of what should be done with the money raised through such a tax and who should benefit from it.

Frieden also spoke on the general position of Luxembourg within the eurozone, saying that “Euroland is a reality we sometimes forget,” stressed the interconnectedness between all member states, whether they share the currency or not, and the knock-on effects of the crisis. He highlighted that the public, too, needed to be informed about the cause and effect of rescue programmes as they were “not just an act of solidarity.”

Speaking to an audience including the British ambassador to Luxembourg Alice Walpole, Frieden said it was “extremely regrettable” that Britain vetoed the treaty changes proposed last year, foreseeing a Europe that develops in different circles, from Schengen to the euro and beyond.

Frieden also showed himself worried about the upcoming year, saying that measures had to be taken to ensure sound public finance, even if they were hard and sometimes unpopular, such as the recent changes to the indexation.

Ensuring stability and confidence “cannot be done overnight” but instead “many steps need to be taken” concluded Frieden, echoing former British premier Winston Churchill with the words, “success is not final, failure is not fatal, it is the courage to continue that counts.”