International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

COMMENT: Why Europe should persevere with the FTT

800px-cityoflondonatnight10small.jpg

With the Dutch Finance Minister calling on the European Commission to seek alternative means of taxing the financial sector, there are those in the media proclaiming the death of the financial transaction tax (FTT). They should not be listened to.

The UK’s opposition to the Commission’s proposals for a FTT has hardly been veiled. Chancellor George Osborne’s insistence that Britain would only consider implementing the tax if it were rolled out on a global basis is a transparent attempt to pass the buck for ever more. But it has to stop somewhere.

Through the Commission’s proposal, a rare opportunity has been granted to make this most controversial and once niche of all taxes work in the interests of the EU’s 27 member states and provide a blueprint for a FTT that could be successfully rolled out across the world’s financial centers.

Quite clearly, we are not going to see an EU-wide FTT without the backing of the UK and the inclusion of Europe’s largest financial centre. But a great many hopes have been pinned on a eurozone FTT giving that much needed model that could show the rest how it would work.

With the Netherlands’ call to look for alternative means of taxing the financial sector, citing concerns that the proposals on the table will not aid financial stability and will harm the Dutch pension sector, that dream appears, for the time being at least, stalled.

But EU-wide policy has always had to move at the pace of the slowest member. The keenest voices in France and Germany clamouring for a tax on financial transactions are not going to be quietened by UK little-island thinking or a lack of Dutch courage.

The Commission should be equally bold in its perseverance with the FTT. Look for other options, certainly, but do not shy away from riding an unprecedented wave of public opinion that the financial sector needs to make a fair contribution to its role in the crisis. It took ten years to get the common consolidated corporate tax base (CCCTB) to the stage of a proposal. These things simply take time and those proclaiming the death of the FTT after only a few short months of disagreements between member states, have probably reported prematurely.

In the meantime, governments desperately need money. The FTT has great potential to raise substantial sums with miniscule rates. It is little wonder, given the strength of public opinion and the weakness of public finances, why France is keen to run ahead of the pack.

Of course, in the short-term, the FTT may have a negative impact on the French economy as banks move transactions abroad, but if Sarkozy’s gamble pays off and Germany, Italy and other key European jurisdictions follow France’s lead, countries such as the UK and the Netherlands may find they’ve missed a trick and a substantial revenue raiser.

It may be that the French experiment fails. But dire situations need radical solutions and they are right to try. Europe should be right behind them.

Further reading:

EXCLUSIVE: EC’s Manfred Bergmann reveals why the FTT’s critics are wrong

Netherlands look for other means to tax financial sector

Should France go it alone with a Tobin tax?

Ten things you need to know about the EU financial transactions tax

Why EU FTT hitting cross-border transactions might not be so bad

more across site & bottom lb ros

More from across our site

David Pickstone and Anastasia Nourescu of Stewarts review the facts and implications of Ørsted’s appeal at the Upper Tribunal.
The Internal Revenue Service will lose the funding as part of the US debt limit deal, while Amazon UK reaps the benefits of the 130% ‘super-deduction’.
The European Commission wanted to make an example of US companies like Apple, but its crusade against ‘sweetheart’ tax rulings may be derailed at the CJEU.
The OECD has announced that a TP training programme is about to conclude in West Africa, a region that has been plagued by mispricing activities for a number of years.
Richard Murphy and Andrew Baker make the case for tax transparency as a public good and how key principles should lead to a better tax system.
‘Go on leave, effective immediately’, PwC has told nine partners in the latest development in the firm’s ongoing tax scandal.
The forum heard that VAT professionals are struggling under new pressures to validate transactions and catch fraud, responsibilities that they say should lie with governments.
The working paper suggested a new framework for boosting effective carbon rates and reducing the inconsistency of climate policy.
UAE firm Virtuzone launches ‘TaxGPT’, claiming it is the first AI-powered tax tool, while the Australian police faces claims of a conflict of interest over its PwC audit contract.
The US technology company is defending its past Irish tax arrangements at the CJEU in a final showdown that could have major political repercussions.