On 14 February the European Commission adopted the (revised) proposal for a Financial Transaction Tax (FTT). The controversial tax would be implemented by 11 Member States (Germany, France, Italy, Spain, Austria, Portugal, Belgium, Slovakia, Slovenia, Greece and Estonia) under a so-called enhanced cooperation procedure. It is expected to rake in yearly revenues of EUR 30-35 billion from the financial sector.
Europe’s banks say, however, that whilst the Commission has calculated the revenue that this tax would generate, it does not appear to have sufficiently taken into consideration the cost to the economy in terms of diminished economic growth and employment.
The so-called regional tax would be due if any party to a transaction is established in one of the participating Member States. Furthermore, many resident intermediaries outside the 11 Member States would be required to collect the tax without an appropriate legal basis.
“We do not see how in practice the extra-territorial discipline of tax collection can be put into effect if the transaction takes place outside the participating Member States,” said Guido Ravoet, Chief Executive of the European Banking Federation.
As EU Finance Ministers rubber stamped the Commission plan at their meeting in Brussels on 22 January, the EBF expressed concerns that the proposal significantly challenges the principles of the Single Market as the FTT would be implemented in only 11 of the 27 EU Member States. Europe’s banks fear that the European financial sector and the services it offers its citizens would be placed at a competitive disadvantage compared to the rest of the world.
By Roger Kaiser, Adviser : R.Kaiser@ebf-fbe.eu