COMMENT: Why Europe should persevere with the FTT

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

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 & shared bottom lb ros

More from across our site

Experts from law firm Kennedys outline the key tax disputes trends set to define 2026, ranging from increased enforcement to continued tariff drama and AI usage
They also warned against an ‘unnecessary duplication of efforts’ in UN tax convention negotiations; in other news, White & Case has hired Freshfields’ former French tax head
Awards
Submit your nominations to this year's WIBL EMEA Awards by 16 February 2026
Defending loss situations in TP is not about denying the existence of losses but about showing, through proactive measures, that the losses reflect genuine commercial realities
Further empowerment of HMRC enforcement has been praised, but the pre-Budget OBR leak was described as ‘shambolic’
Michel Braun of WTS Digital reviews ITR’s inaugural AI in tax event, and concludes that AI will enhance, not replace, the tax professional
The report is solid and balanced as it correctly underscores the ambitious institutional redesign that Brazil has undertaken in adopting a dual VAT model, experts tell ITR
The Brazilian law firm partner warns against going independent too early, considers the weight of political pressure, and tells ITR what makes tax cool
The lessons from Ireland are clear: selective, targeted, and credible fiscal incentives can unlock supply and investment
The ITR in-house award winner delves into his dramatic novelisation of tax transformation, and declares that 'tax doesn’t need AI right now'
Gift this article