European financial transaction tax more likely!

Christian VoigtA very broad agreement in favour of a European Union financial transaction tax emerged on last Monday (9th January 2012), at the start of the Economic and Monetary Affairs Committee’s work on the legislative proposal. Spokespersons for the European Parliament’s (EP) various political groups all advocated such a tax, at least throughout the Eurozone, and many were concerned about France’s weekend hint that it could go it alone (read more here).

Currently a 0.1 % tax is proposed on the value of equity and bond transactions and 0.01 % on the notional value of derivatives, which EP claims would raise €55bn.

The draft report is scheduled to be presented on 28th February, put to a committee vote in early April and a plenary one in June 2012. Parliament has a legal right to present an opinion on the Commission’s proposal.

Market participants fear that a financial transaction tax will lead to a significant decrease in trading volumes across Europe. Furthermore, a shift of order flow from cash products to derivatives, due to the different levels of taxation, might take place.

Comments
One Response to “European financial transaction tax more likely!”
  1. Christian says:

    Anni Podimata, the Greek socialist MEP proposed on 29th Feb that the scope of the the tax be widened, and made payable by foreign institutions trading securities issued in the EU, even if all trading takes place abroad. This is similar fashion to the UK’s existing stamp duty on share trading.
    Article on eFinancial News suggested that the proposal was not well received and is unlikely to get passed.

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