Europe reluctant on implementing financial trading tax
By Quantum Capital Fund
Taxation policies seem to be a major issue in Europe. Recent reports by Reuters shows that many European countries are planning a major scaling back of plans to initiate a financial trading tax. This comes after European tax programs were shoved under the spotlight following the US Senates grilling of Apple over their tax practices.
Reuters reports that European countries planning a tax on financial transactions are set to drastically scale back the levy, cutting the charge by as much as 90% and delaying its full roll-out for years, in what would be a major victory for banks.
Reuters adds that banks have lobbied furiously against the tax, due to be levied by Germany, France and nine other European states. It has also hit legal challenges from Britain, which will not join the tax but fears being forced to collect it on behalf of other EU states, driving business from London's financial center. There are however, deep divisions within the European Union regarding the tax and its implementation.
The Reuters report adds that seven months ago, Germany, France and nine other countries - Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia - agreed to press ahead with the levy, having failed to persuade all 27 EU member states to sign up. Some cash-strapped countries have already begun counting on the new income, a welcome windfall when shrinking economies and rising unemployment are sapping tax revenue. But in a world where billions of euros can be moved at the stroke of a finger, even some of the tax's backers are getting cold feet.
The report goes on to say that the tax faces many obstacles, including how it should be collected and whether it should be imposed according to where the buyer or seller is based, or where the traded security is issued. In the current design, if either the buyer or seller is based in one of the participating countries, the levy can be imposed even if the transaction takes place elsewhere, such as in London. Luxembourg and Britain fear this will hit trading in their financial centers and could lumber them with the task of collecting the levy, despite not being involved.
Taxation programs are surefire ways to ensure a reliable revenue stream, and such programs do work if they are communicated and implemented effectively. The countries who have come up with the concept need to collectively some together to discuss the programs implementation. It must then make sure that it publicizes the new program effectively so that the public knows exactly what is covered by the tax and what isn’t.