Despite the refusal of the United States, Europe intends to move forward only to create a tax on financial transactions. This project may prove to be difficult to gain acceptance within the European Union (EU).
This legislative proposal could be adopted on Tuesday and presented by the Commission President, José Manuel Barroso on Wednesday in Strasbourg during a speech on “State of the Union” to the European Parliament.
Paris and Berlin have won little success in defending a tax on financial transactions established across the G20 in order to finance such development aid. There is “no consensus today” on this issue because of “reservations” U.S. has recognized the French Minister of Finance, Baroin Friday in Washington. The European Union has decided to proceed only on the subject.
In the spirit of the Commission, the tax should be proposed this week would see at least part of its product feed into the budget of the European Union, in return for an equivalent decrease in national contributions to the envelope.
“The idea is to help the financial sector, which is in a privileged tax status with the VAT exemption it enjoys, which makes saving 18 billion euros per year in Europe,” said one EU source told AFP.
Philosophy: a tax that would apply on a plate as wide as possible (stocks, bonds, derivatives, structured products), with rates as low as possible.
Financial institutions, banks, stock exchanges and financial services providers, would be responsible for collecting the tax from their customers and their payment.
The working hypothesis for several weeks is to impose a rate of 0.1% for stocks and bonds and 0.01% for products. But in the end, the rates may be slightly different. These would be minimum, States are then free to apply higher rates. Depending on the option chosen, the tax could bring in 30 to 50 billion euros per year.
But even within the European Union, the idea is far from unanimous. Some fear, as the government and British business, relocation of financial transactions to third countries, detrimental to the City of London. “Below a certain threshold, the incidence of a tax is negligible with respect to the attractiveness of Europe”, argued one European source.
One way to avoid the relocation also lies in the principle of territoriality, for example, a non-European bank, but recorded in Europe for some operations would be affected the same way that a European bank.
It remains to convince all 27, which does not look easy. The British position is shared including Sweden and the Netherlands. The Polish Finance Minister Jacek Rostowski has also, recently expressed fears of outsourcing transactions.
In case of failure to achieve unanimity, an enhanced cooperation procedure could be implemented between several EU states. The tax could then be applied only in the euro area, as suggested recently, the German and Belgian Minister of Finance Didier Reynders and Wolfgang Schäuble. In any event, the time that the proposal be discussed and adopted, it will not happen before 2014 at the earliest.
Source: www.finance-investissement.com
