Brussels, 22/09/2011 (Agence Europe) - Reuters reports that a European tax on financial transactions (not covering currency changes or the primary bond market) might come into force in the eurozone on 1 January 2014, and possibly in the whole of the EU27, according to a draft document to be unveiled shortly (probably on 1 October) by EU Taxation Commissioner Algirdas Šemeta.
The European Commission's draft legislation hangs on where the tax-paying body is officially registered, which means that financial transactions that take place outside the EU will be covered if they involve a financial institution registered in the EU (see the Franco-German ideas in this connection in EUROPE 10450). The reason for this is to prevent institutions from relocating their transactions to outside the EU and it should also prevent capital from flooding out of the EU. The tax would not cover individuals, sovereign debt primary market deals or the issuing of shares on stock markets. The tax would be automatically deducted immediately a deal is done using electronic trading systems. The tax rate has not yet been decided, but the Commission is working on the assumption of a 0.1% tax on trade in stocks and shares (and bonds), and 0.01% on derivative sales, and believes this should raise some €50 billion a year.
Within the EU, opposition to this new tax mooted by France and Germany is headed by the United Kingdom, backed by considerable support from Europeans and a fair number of member states, which may well restrict its application to the eurozone, initially at any rate. Resistance to the idea is also very strong among G20 members, like the United States. This means that the eurozone may be the in the taxation avant-garde, presenting an image of cohesion to the outside world and giving itself a world leadership role in this domain. (FG/transl.fl)