Brussels, 12/09/2011 (Agence Europe) - The British representative at the G7 finance ministers meeting in Marseilles repeated his “scepticism” on Monday 12 September over a financial transactions tax (FTT) that applies only within the EU, as advocated by France and Germany in their draft proposals sent to the European Commission on Friday 9 September (see EUROPE 10449).
This merely confirms the view expressed previously by the UK government following the Merkel-Sarkozy summit on 16 August. Any financial transactions tax must apply worldwide, otherwise transactions will simply transfer to countries not applying the tax, said the UK Chancellor of the Exchequer, backed in this view by UK financial circles as a whole, which fear that applying such a tax only in Europe would have a harmful effect on business in the City of London, the world's third largest financial centre. The City is Europe's largest currency and shares market and has a powerful futures market and a strong metal exchange.
The Franco-German proposal would impact on all financial transactions where at least one European player is involved, that is, all types of financial transactions, shares and bonds traded on a secondary market and derivatives listed or traded on an over-the-counter market, and also currency transactions. It would also include intra-group transactions. However, loans, deposits and transactions of the primary shares market would not be affected. Possible bases considered (actual amount of the money transfer, mark-to-model valuation or notional contract value) would be adapted to the various kinds of products and rates adjusted for each, while remaining low enough that relocation of transactions would not be encouraged. The tax could bring in between €31.5 and 54 billion per year, which could feed into the European Financial Stability Facility (EFSF). (F.G./transl.rt)