Reuters has reported that, following a meeting of finance ministers on Monday, ‘the extent and level of the [EU financial transactions] tax are still undecided and there have been splits over what the tax should include’. German finance minister Wolfgang Schaeuble was reported ahead of the meeting as saying: ‘The interests of the participating countries are so different that we can only implement a limited taxation of shares and some derivatives in the first step.’
Reuters added: ‘This is a far cry from the European Commission’s original proposal with its “big bang” start in January for stocks, derivatives, bonds, repurchase agreements, securities lending and borrowing, and units in mutual funds. Even a phase-in is already raising concerns, however, as it would mean a collection system would still have to be in place from day one, while revenues would only build slowly.’
Taxand chairman Frédéric Donnedieu de Vabres commented: ‘The proposed tax has faced a barrage of criticism and opposition, including individual country disagreements and a European financial industry up in arms. The EU Council legal service raised objections last year around the likely impact on country relationships and the wider global economy, as well as its bearing on long-term growth and jobs. The EU’s own examination of the tax showed that it would shrink the economy, hitting investors more than the very banks it is designed to target, so much so that it believes the tax is unlikely to generate any extra revenue at all.
‘FTT, originally conceived as a quick-fix for the current financial woes in the European economy or a way to end poverty around the world, was expected to generate €30–35bn per annum. However, as the scope of the tax continues to be defined, the tax is looking more problematic than the magical revenue source it was positioned as,’ he added. ‘The delay does not bode well for the implementation of the tax, as despite high profile backers across Europe pushing hard for this levy to be introduced, it seems that the difficulty of implementing truly harmonised taxes will eventually prove too much for Europe’s FTT.’
Reuters has reported that, following a meeting of finance ministers on Monday, ‘the extent and level of the [EU financial transactions] tax are still undecided and there have been splits over what the tax should include’. German finance minister Wolfgang Schaeuble was reported ahead of the meeting as saying: ‘The interests of the participating countries are so different that we can only implement a limited taxation of shares and some derivatives in the first step.’
Reuters added: ‘This is a far cry from the European Commission’s original proposal with its “big bang” start in January for stocks, derivatives, bonds, repurchase agreements, securities lending and borrowing, and units in mutual funds. Even a phase-in is already raising concerns, however, as it would mean a collection system would still have to be in place from day one, while revenues would only build slowly.’
Taxand chairman Frédéric Donnedieu de Vabres commented: ‘The proposed tax has faced a barrage of criticism and opposition, including individual country disagreements and a European financial industry up in arms. The EU Council legal service raised objections last year around the likely impact on country relationships and the wider global economy, as well as its bearing on long-term growth and jobs. The EU’s own examination of the tax showed that it would shrink the economy, hitting investors more than the very banks it is designed to target, so much so that it believes the tax is unlikely to generate any extra revenue at all.
‘FTT, originally conceived as a quick-fix for the current financial woes in the European economy or a way to end poverty around the world, was expected to generate €30–35bn per annum. However, as the scope of the tax continues to be defined, the tax is looking more problematic than the magical revenue source it was positioned as,’ he added. ‘The delay does not bode well for the implementation of the tax, as despite high profile backers across Europe pushing hard for this levy to be introduced, it seems that the difficulty of implementing truly harmonised taxes will eventually prove too much for Europe’s FTT.’
