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Europe's Tobin tax plan challenged by Italy, UK

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Wednesday, 08 May 2013

Europe's Tobin tax plan challenged by Italy, UK

The proposal to introduce a tax on financial transactions (FTT) – or Tobin tax – across a number of EU countries by January 2014 is under pressure as Italy wants fundamental changes to the plan and the UK has launched a legal challenge in the European Court of Justice.
“Transactions in state bonds should be excluded from the taxed instruments in the proposed Tobin tax,” A statement on 20 April from Italy’s permanent representative in Brussels, Ferdinando Nelli Feroci, said. He described this matter as a red-line, non-negotiable issue for Italy.
Meanwhile, Britain has imposed another potential barrier through its challenge to the enhanced cooperation launched on 19 April. The FTT’s proposed "issuance principle" means a transaction will be taxed whenever and wherever it takes place, if it involves a financial instrument issued in one of the 11 countries. This is aimed at stopping trades moving out of the so-called FTT zone to London or elsewhere and reinforces an earlier "residence principle" that says if a party to the transaction is based in the FTT area, or acting on behalf of a party based there, then the transaction will be taxed regardless of where it takes place. UK Chancellor George Osborne said a formal complaint 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," he told the BBC.
The European Commission formally proposed a tax on financial trading in 11 countries on 14 February, saying the levy could raise up to €35 billion each year and make banks more accountable following the 2008 banking crisis. Development aid organisations called on the European Commission to allocate 10% of the revenue from the tax “to the benefit of the poorest in the world".

Source: Euractiv