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The FTT will also apply in all other countries where there are trades linked to stocks, bonds and derivatives from the 11 participating countries. Britain, the EU's biggest financial trading centre by far, fears its markets will be sucked into the tax, causing a drop in trading volumes. Italy, included among the 11 going ahead with the tax, introduced its own levy on share trades this month, triggering a sharp fall in equity volumes.
"There is no risk that the City of London will be negatively impacted", said Manfred Bergmann, European Commission director for indirect taxation. The first task is to finalise the tax so that it works, in the hope other EU states and countries elsewhere in the world will join later on, Bergmann added.
Bergmanm said the Commission remains "silent" for now on how the tax, estimated to raise up to €35 billion a year, will be collected, especially in countries not taking part. "There is no extra burden on non-participating Member States to collect the tax. Will the City of London be forced to collect tax for Germany and France? No", he added. It was up to the 11 countries taking part to decide how they wanted the revenue collected, he said.