Categories:Europe,Investments

Financial transactions tax must be implemented soon, argues EU commissioner

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An EU-wide financial transactions tax (FTT) will strengthen the single market and order institutions to pay their “fair share”, according to the EU commissioner for taxation.

Algirdas Šemeta, the EU commissioner for taxation, customs union, anti-fraud, audit and statistics, has argued for the importance of leadership by the Danish EU presidency in helping to achieve consensus across all 27 Member States on the FTT.

Šemeta stressed the importance of finding enough political common ground to implement the tax in all member states.

He says: “Some are already asking whether we should look for alternative routes to agreement, by moving ahead at less than 27.

“I say that the time is not ripe for such a move: we must maintain the active engagement of all member states that we have seen up to now.” (article continues below)

The FTT would establish a “harmonised framework”, reducing competitive distortions; ensure financial institutions paid their fair share and “discourage unwarranted and leveraged transactions” such as high frequency trading, argues Šemeta.

The proposed 0.1% transactions tax on shares and bonds would not be sufficiently high as to encourage traders to leave the EU and would not affect the financial activities of ordinary citizens or companies, Šemeta said in response to criticisms.

He adds: “One thing is absolutely clear: member states must reach a decision on the FTT, and we must do so quickly.

“This is what citizens expect. It is what markets are looking for. And it is what many member states have called for,” says Šemeta, expressing his confidence in the Danish presidency to deliver these reforms.

 

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Readers' comments (2)

  • "would not affect the financial activities of ordinary citizens or companies,"

    The recent EFAMA study finds that if FTT were in place for 2011, it would have cost investors and pensions an astounding €38 billion for UCITS funds alone.

    Analysis conducted by BlackRock finds the cascading tax will cost money market funds in Europe 7.82 percent annually, effectively destroying their existence. Equity fund yields will be reduced by 2.52 percent annually. That would reduce retirement account yields by one half over a lifetime career.

    From the UK's European Scrutiny Committee quoting the European Commission's 1223 page FTT Impact Assessment (even before the damaging relocation effects): a 3.43% fall in EU GDP equates to a fall in economic output worth €421 (£362) billion and a 0.34% fall in employment equates to a loss of 812,000 jobs.

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  • Why are we referred to as 'states' now?

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