The controversial Financial Transaction Tax (FTT), which has triggered complaints from USA and UK, is planned for 11 member states but the EC said it envisaged it being rolled out across the European Union and eventually globally.
EU Tax Commissioner Algirdas Semeta said the FTT would ensure that the “financial sector makes a fair and substantial contribution to public revenues”. He claimed that in the EU the sector was “under-taxed” by €18billion. The proposed tax would be set at 0.01% for derivatives, and 0.1% for stocks and bonds. The document he said "lays the final paving stone on the road towards a common FTT in the EU."
Britain fears that the FTT will lead to double tax because the UK already imposes Stamp Duty on trades. There are concerns that the institutions from the 11 countries could quit the City to avoid paying transaction levies twice.
The EC has also said iy will use tax directives to enforce FTT collection in all EU countries, including Britain and 15 other non-participating EU countries. This means that while the tax would enforced in the City it could not be imposed on Wall Street or in Tokyo without a double taxation treaty, creating another element of discrimination against Britain.
EU officials have angered Britain and over non-participating European countries by saying they should join FTT if they want to anomalies.
The fresh draft of the proposal includes redoubled efforts to stop traders shifting transactions to London, or anywhere else out of the FTT zone. The “residence principle” has been tightened to apply to the resident bank or trader, “regardless of where the transaction takes place.”
A so-called “issuance principle” has also been added to tax instruments that originate within the zone, regardless of where they are traded. “Furthermore, explicit anti-abuse provisions are now included,” the statement said.
The plan has been agreed by Germany and France and nine others which altogether represent two-thirds of EU economic output. The other 16 EU members rejected the plan, including the UK. (telegraph.co.uk)