1/4% Tax on all stock trades pushed in NY Times today

Not really fair, I'd say both your POV are interesting and relevant to this thread. Also from memory, it's Sarkozy and Merkel who championned the FTT after the 2008 crisis. It seems Sarkozy's pro finance stance was short lived. Now his party is more vocal against gay rights than against the FTT. Hopeless France.

 

http://www.ft.com/intl/cms/s/0/e82a3792-6a2a-11e2-a3db-00144feab49a.html#axzz2JOcYEgRc


Wider euro ‘Tobin tax’ will net €35bn

By Alex Barker in Brussels


The eurozone’s biggest economies would raise €30bn-€35bn from their planned levy on financial transactions, according to an expansive European Commission proposal that ensnares trades executed in London, New York or Hong Kong.

The revised and strengthened Brussels draft plan, seen by the Financial Times, sets the stage for France, Germany and nine other euro area countries to agree the exact terms of Europe’s first so-called “Tobin tax” on equity, bond and derivative transactions.

Brussels’ drive for a Europe-wide tax opened an irreconcilable rift between EU members, forcing a eurozone vanguard to forge a smaller transaction tax bloc covering two-thirds of EU economic output but excluding the City of London.

This long-awaited Brussels blueprint, to be published within weeks, is the basis for talks between the 11 states, who no longer need permission to implement the levy from opponents such as Britain or Sweden.

The draft, prepared by the EU tax commissioner Algirdas Semeta, casts a wider net than expected by adding anti-avoidance measures to the original plan for an EU-wide levy, so that financial business does not decamp to safe havens.

Under the plan, a levy of 0.1 per cent on stock and bond trades and 0.01 on derivatives is imposed on any transaction involving one financial institution with its headquarters in the tax area, or trading on behalf of a client based in the tax area.

Such a levy is dubbed a Tobin tax after economist James Tobin, who mooted a global tax on currency trades in the 1970s.

In a bid to clampdown on avoidance, as “a last resort” the Commission proposes the tax should also apply to transactions based on where the financial product was issued, even if the parties trading it are in Asia, the US or Britain.

This would cover shares, depository receipts, bonds, money market instruments, structured products and exchange-traded derivatives “with a clear connection to a participating member state”.

This requirement will mean “it will be less advantageous to relocate activities and establishments outside the FTT jurisdictions” since the financial instruments “will be taxable anyway”.

While the proposal calls for the levy to be in place by January 2014, officials say the talks could take much longer and will partly depend on Berlin’s appetite for a quick deal.

The €30bn-€35bn generated is bigger than expected. The broad scope of the draft tax will come as a surprise to some member states and is still likely to trigger a lively debate, even within the Commission, according to senior European officials.

Extra exemptions are also included in the design of the tax, in part to soften the impact on pension funds and core economic activity. Tax is not liable on overnight repurchase agreements, the issuance of shares and units in retail funds known as Ucits and the exchanges of stock in mergers.

The proposal will absolve eurozone states or central banks from paying the tax when intervening in secondary sovereign bond markets, even though investors trading bonds would be liable. Spot currency transactions are also exempt.

To win political consensus for the deal, further carve-outs are likely. Those countries that have expressed interest in a transaction tax include Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia.

An impact assessment for the EU-wide levy suggested it would hit long-term growth and cost jobs. An updated analysis is not being prepared for the eurozone-only tax.

If this design of the tax is adopted, it would mean offshoots of banks headquartered in the tax area – such as Deutsche Bank or BNP Paribas – as well as any trades undertaken on behalf of clients based in the 11 countries will be hit by the levy, even if they are trading in the City of London.

Any US or Asian institutions trading securities issued in France, Germany, Italy or Spain would also be taxed.

 

Cloud cookoo land if they they think they can raise 30-35bn, it will be more like 3-3.5bn. If the pension funds are going to be exempted they wont even raise that much.

 

This will be revenue net negative...and it will take awhile before these idiots realize it. Amazing job socialists!

 

"This would cover shares, depository receipts, bonds, money market instruments, structured products and exchange-traded derivatives 'with a clear connection to a participating member state' ".

So if you're trading Bund futures on a London exchange then what happens? Arguably there is a clear connection to the German state but why would the UK ever allow a tax to be levied on a London exchange given its opposition?

And even if the UK crumbles under the strain of the EU pro-FTT agenda, what is to stop the US exchanges from offering Bund futures out of New York or Chicago?

Interested to know what the experts on the thread think..

 

This is the issue with ADRs on french stocks at the moment. The french shouldn't be able to reach trading of ADRs in the US.

But they are trying it on, im not sure which Brokers are paying up and which aren't at the moment.

There was also a US politician who was trying to get a law passed regarding the french attack on American Depository receipts.

Anyone have an update?

 

interactive brokers charges the french tax on adr's, i would assume most brokers are. better safe than sorry.

anyway, this is what this topic keeps coming back to. the EU FTT has far reaching consequences for every exchange in the world, who are supposed to be doing all of the hard work of cashing in the tax withou any incentive whatsoever. every non-ftt country that would comply with the rules any yes-ftt country is forcing on them might as well just join the yes-ftt countries, as at least that way they would actually get some of the proceeds.

the proposal should be creating outrage and (in the future) countless lawsuits around the world. however, this is not happening. the UK didn't even try to stop it last week. it's a proposal that on the face of it has less chance of happening then an end to the Israeli conflict, yet the proposal is still on the table and still not shot down by the world community. i honestly feel i'm missing something here, a part of the picture that's vital in to understanding what the hell is going on and why semeta still hasn't been told this proposal is a ridiculously bad deal for non-participatants.

 

Unfortunately the EU pro-FTT lot are going about this with missionary zeal, and don't think about the nice young men in white shirts and ties, think Spanish Inquisition.

The only way to stop them is to put the gloves on and fight, or bare knuckle if need be.

Indeed, what happened to the proposed U.S. legislation to bar collection of the FTT on French ADRs?

 

I didn't know that, but it's kinda worrying that Interactive Brokers would not fight this. Sets a bad precedent. Can they not see where this will end? We're talking USD-denominated ADRs traded on a US exchange, right? Why would France have any claim here? Mind blowing.:eek:

 

No market-making exemption? If it's the case, at least Semeta is true to his goal, which is taxing finance. The cost for the real economy will be mind-blowing but whatever...