If eleven EU member-states (including free market Estonia, which should know better) wish to introduce a Financial Transaction Tax that’s up to them, and should be between them.
But they are not content to leave it that. The Commentator’s Simon Miller explains:
The FTT will see 0.1 percent charge on shares and bonds, money market instruments, repurchase agreements, securities lending agreements, and 0.01 percent on derivatives products. The EU claimed that it would raise up to £30bn in revenues and force banks to “engage in more responsible activities” but the key message came later.
Rather than an attempt to stop high frequency trading, the real reasons were laid bare by EU Tax Commissioner Algirdas Semeta when he said the EU financial sector was “under-taxed” and that the charges would ensure that the “financial sector makes a fair and substantial contribution to public revenues”.
…If you were in New York or London you would be pretty pleased about this, no? Leave those idiots over the channel to get on with penalising their own financial markets, right? Well, unfortunately the eurocrats have thought about this.
In an extraordinary move, eurocrats have expanded the “residence principle” – where a tax is imposed on all trading carried out by resident firms, regardless of where the trade occurred – to include an ‘issuance principle”. Essentially, if banks trade shares in Volkswagen between London and New York, that trade will be liable for tax so not only will it hit financial firms, it will hit non-financial companies’ risk management activities as they use stock mechanisms to offset risk.
And is this an attempt by Paris, Berlin and the others to loot or at least hurt the wicked “Anglo-Saxon” finance that has enraged the continent’s corporatists since, well, let’s just say the prewar years and leave it at that? Of course, it is.
Frankly this is a base grab that ignores all territorial rights and tax jurisdictions and arrogantly extends EU reach into other countries’ tax domain.
It is ironic that as EU-champions try to laud the start of free trade area negotiations between the EU and the US, the useful idiots in Brussels, Paris and Frankfurt have gone out of their way to anger companies across the globe. As a submission from a coalition of American business organisations put it, this FTT is “the unilateral imposition of a global FTT”.
In addition, the group, which includes the US Chamber of Commerce, wrote:
“These novel and unilateral theories of tax jurisdiction are both unprecedented and inconsistent with existing norms of international tax law and long standing treaty commitments.”
It added that there was “a high risk that their adoption could lead to double and multiple taxation, a deterioration of international tax co-operation and trade protectionism”.
Indeed there is.
The EU as a whole has gone along with the idea of this tax, and so has to take some sort of responsibility for the way it has evolved. Brits, of course, should ask themselves why they are still members of an organization so comfortable with an attack on a vital sector of the UK economy.