Financial Transaction Tax Reach New Stage http://www.taxationinfonews.com/201...-tax-beginning/ Just catching up here on extra territorial reach and residence principal. Seems confusing, difficult to implement and enforce and easy to avoid or evade. We need the EC commissioner to release the substance he promises in the link above._ I hope Obama, Geithner and other Democrats are not letting FTT snowball in the EU so they can join in for global consensus and passage later. If U.S. funds start paying FTT to Brussels, the U.S. would probably want its own FTT payable to Washington, denying Brussels the chance to tax the U.S.tax base. The EU seems to be designing the tax to encourage other countries to join in and share in the tax booty, or in effect be penalized. 2013 and 2014 are going to be very challenging for U.S. debt-ceiling negotiations. First, Obama is insisting on tax hikes on the upper income in the fiscal cliff. The deficit won't be fixed and they will hunt for other tax revenues soon. If EU FTT is working well in their eyes, Democratic leaders may borrow additional taxing ideas from the EU. Geithner will be gone and the next Treasury Secretary probably won't be from the financial services industry and perhaps more friendly to FTT - especially if he is from academia and doesn't like banking. I really hope EC-11 FTT is voted down in QMV. If the EU passes this FTT in enhanced cooperation, its a very bad escalation for traders. I think EU FTT leaders view it as a savior for keeping the EU together. They need EU revenue eventually to be paid to Brussels and will give this their all. My first articles on EU FTT years ago said this very point. Don't count on Republicans to block all taxes forever. Seems to me that things are getting worse and worse.
Even if it passes QMV. They still have to decide the details between the 10 or 11 countries, for example the Netherlands is demanding an exemption for their pensions industry, pensions would normally be largest payers of the tax. In the end its going to be watered down.. it promised to raise in the order of 50 billion a year, they will be lucky to raise 10% of that if they exempt pension funds and banks (who will get a market maker exemption). That just leaves hedge funds as the main payers, but the hedge fund industry will find ways around it for sure.
How much detail are proponents required to provide in their proposal before it goes to QMV? I am concerned that they might try to withhold some contentious aspects of the their proposal prior to QMV - specifically on the details of planned extra-territorial reach - in order to get it through.
Ecofin meeting is taking place now with FTT the last item on the agenda. Live webcast: http://video.consilium.europa.eu/webcast.aspx?ticket=775-979-12109
I don't think so. When the EU taxes a trade between a EU firm and a non taxing country firm, the EU taxes both firms whereas when both countries have a FTT in place, each countries get the tax from their own firm. Well...That's what they are trying to create...It doesn't mean we will see it implemented. As Mr Green said, this extraterritoriality is the most scaring part of this FTT. This is a quite good way in fact to push everybody on board( if legal ... big IF ). The free world must wake up now as I am not sure the other EU countries will manage to stop the EC. Most vocal FTT opponents like Canada must make it clear that the EU will never tax a canadian firm trading in Toronto... And exchanges should start thinking about protecting their customers against potential taxes from the EU...If nothing works diplomatically to stop them from their madness, LIFFE and such should create confirmation pop-ups when you trade with an EC institution to be sure the UK client understand he will have to pay 10* the average fees to a stupid country which has nothing to do with his trade. If nothing else works, they must be marginalized.
Netherlands Fin Min: Dutch govt giving serious consideration to joining countries that are moving ahead with Financial Transaction Tax
Poland said they (like the UK and malta and others) would ideally like to see a draft to check there are no 'spill over' effects (i.e. extra-territorial reach) This is important as Poland have a large and maybe deciding vote in the QMV. Semeta and the german finmin said they want to rush it through as quicky as possible and ideally not provide a draft before authorisation as it would take too long. They are in a hurry, i presume to get it done before the German elections. Austria and UK and others also wanted to see a new impact assessment.
The UK, Sweden, etc. would be foolish to approve this plan without knowing if there's FTT extra-territorial reach, especially now that Poland has made its position known. Those opposed to extra-territorial reach can kill EC-11-FTT with Poland's support.
I just don't see how the UK, Sweden, Malta or whoever could possibly vote for this thing without seeing all the details spelled out. These countries can't just vote for something this important thats incomplete and then let Brussels fill in the blanks at a later date. Thats just complete nonsense. My guess is either all the details are released before the QMV vote or the vote gets delayed until those details are released. As far as US firms paying a tax to the EU on trades I just don't see that happening either. If this does somehow go through with some sort of extra territorial reach this entire mess will end up in multiple courts. Hopefully Poland uses it's QMV votes to help stop this madness. -Guru