The campaign against the tax, which will be imposed by 11 of the EU's 27 countries, focuses on how much it would boost the cost of funding for governments and companies, erode returns earned even by long-term investors, and hurt funding markets which are crucial to the health of the financial system. Advocates of the financial transaction tax say it is small enough and covers enough assets not to distort markets while ensuring banks, which received taxpayers' cash during the financial and eurozone crises, make a contribution to the public coffers as governments try to rein in budget deficits.
Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia have said they will levy the tax. The Commission says revenues from the tax are expected to total up to €35 billion a year, or 1 per cent of the total tax revenues of the participating countries. It is still unclear how the tax would be collected in EU countries which won't levy it - a group that includes Britain, which has the region's biggest financial centre.
Bankers are stepping up lobbying of the European Commission and countries which will impose the levy to explain how a tax of 0.1 per cent on stocks and bonds and 0.01 per cent on derivatives could have such a seismic impact. Because such a trade typically involves dealers and brokers as intermediaries between investors, the tax could be levied 10 times, with the same dealer or broker sometimes being taxed twice -- once for buying the bond and again for selling it on -- as well as each time a position is hedged to mitigate risk.
The Commission's own report on the potential impact of the trading tax estimates it could shave 0.28 per cent off gross domestic product in the long run. But it said that imposing the tax "will not negatively impact growth or jobs".
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