EU Financial Transaction Tax Takes Another Crucial Step

The European Union is pushing ahead with plans for a Financial Transaction Tax (FTT). A key milestone in introducing the tax will be reached on the 26th March 2012 in the European Parliament when amendments to the draft legislation are considered in Committee.

The amendments are to a report by Anni Podimata MEP which approves a Commission document which provided for the introduction of a Financial Transaction Tax. This is the technical mechanism by which the Tax could – and almost certainly will – be introduced later this year.

The report wants the FTT to be ‘implemented at the broadest possible scale’ (sic).

The planned tax will:

• cover transactions in all types of securities (shares, equity, bonds, derivatives) and all trades in regulated or non-regulated platforms i.e. every possible transaction

• but does NOT apply to national central banks, the ECB or bodies set up by the EU – so the EU hits everybody but itself and state central banks

• is charged on the counterparty’s residence so institutions within the EU are penalised whereas non-EU institutions are let off to encourage them to use EU instruments

• will be at the rate of 0.1% on shares and bonds and 0.01% for derivatives

• unanimity is declared to be ‘the best way to implement the proposal’ though the enhanced cooperation rules could also be used.

It is very clear that the EU wants this to go ahead in all 27 member states and the legislation is designed with that in mind.

Thus if Cameron thought he was vetoing this, the EU does not seem to share his view.

From OMIB (Our Man In Brussels) with the pink shirt and white carnation.

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