|
|
Financial groups are aghast at its implications but at the same time sanguine about its prospects: even if the 11 interested eurozone states muster the political will to back such an ambitious plan – something diplomats say is unlikely – the challenge of implementation is formidable. Collecting revenues, for instance, would rely on co-operation from governments and financial groups outside the tax zone – something that does not seem forthcoming. Washington objects to a tax that “harms US investors in the US”, big banks are preparing lawsuits, and the UK and Luxembourg are warning that the plan may breach EU treaties.
While national transaction taxes, such as stamp duty in the UK, are not new to the financial world, the wide span and legal inventiveness of the proposed Brussels tax is unmatched. It would be applied to trades executed or ordered by any bank, dealer or group established in the tax area; on financial products issued in the tax area; and on any trade completed within the tax area.
Enforcement – working out what transactions took place, who originated deals and whether they were liable – is, according to the commission, possible through the EU’s accumulated regulations and tax agreements. The UK and others are likely to disagree. In addition non-EU states would still have voluntarily to help execute a tax that they object to as extraterritorial.
The necessary political support for the tax may hinge on arguments over the economy. The financial sector is banking that the eurozone will curb its plans because of fears that the levy would damage growth and disrupt markets.
Full article (FT subscription required)