EU progresses towards FTT
01 June 2012
Europe is rarely as united on tax policy as the Commission would like it to be, but few issues are more divisive than the financial transaction tax (FTT). Salman Shaheen assesses the prospects of an EU-wide FTT, what it will mean for taxpayers and whether it remains the best option for making the financial sector pay for its role in the economic chaos.
The idea of taxing financial transactions is not new. Nobel laureate
James Tobin first proposed a tax on currency transactions in 1972. In
the decades since, the concept of an FTT has been expanded, taking in
shares, bonds and derivatives. But until recently, it has remained on
the fringes of policy, gaining little traction beyond socialists,
development activists, radical economists and academics. The economic
catastrophe of the last few years, however, has dragged it into the
mainstream, with an increasingly vocal majority calling for the
financial sector to pay for causing the mess, and governments desperate
for new revenue streams.
France and Hungary have both decided to unilaterally introduce an
FTT, but most governments recognise the tax is most efficient operating
on a global level. The Commission's proposal for an EU-wide FTT was the
biggest single step in this direction. But given staunch opposition from
Europe's largest financial centre, London,...
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