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The 11 countries going ahead with the FTT are Germany, France, Italy, Spain, Belgium, Austria, Portugal, Greece, Slovenia, Slovakia and Estonia. Under their plans, transactions of shares, currencies and bonds would be taxed.
UK Chancellor George Osborne said an application had been lodged at the European Court of Justice. "We think that the financial transaction tax which the European Commission has put forward is not right for Britain. Britain doesn't want to take part but it also doesn't want to be caught in the effects of this tax being introduced by other countries. Let's be clear - financial transaction tax is not a tax on banks or bankers, it's a tax on pensioners and people with savings and investments.“
Some European governments have blamed speculators and excessive trading for exaggerating the swings in financial markets during the 2008 crash and the recent eurozone crisis. They believe the FTT will help to encourage more responsible trading by financial institutions.
The European Banking Federation (EBF) notes with interest the UK Government’s move to challenge the legal basis for the introduction of the Financial Transaction Tax (FTT), to be implemented by only 11 out of 27 EU Member States.
In addition, Europe’s banks question the Proposal, which goes against the very tenets of the Single Market, given the impact it would have on non-participating Member States and the extra-territorial dimension it would have internationally.
EBF-press release, 22.4.13 © EBF
Julie Patterson, IMA Director of Authorised Funds and Tax, said: “The Financial Transaction Tax is not a tax on financial companies but on investors and pension savers including those in the UK. Even though the UK has opted out of charging a FTT, our clients will still have to pay it if they buy securities or deal with counterparts from any of the participating states. However it is achieved, it would be good news for savers and investors if the FTT in its current form was abandoned.”
IMA-press release, 22.4.13 © Investment Management Association
Luxembourg: “We are very sympathetic to the stance of the UK”, finance minister Luc Frieden told the City Week conference. “We will certainly bring our support to the case that has been started in the European Court of Justice.”
Further reporting by CityAM, 23.4.13 © CityA.M.