Europe Considering Financial Transaction Tax Scale Back

Reuters has reported that participating European countries plan to cut the FTT (financial transaction tax) rate by up to 90% and may have its “full roll-out” delayed. The tax, which is set to target speculative trading, would have its rate reduced from 0.1 percent to 0.01 percent and be applied gradually. If it is put into place, 2014 could see transactions of shares taxed, with bonds and derivatives being taxed later on. The tax still has a way to go until final approval by the participating 11 European countries, which include Germany and France. Germany in particular would most likely not approve of any scale-down. The UK government has expressed strong opposition to the FTT which fears that it will be forced to collect the tax by the EU, Reuters reports, as the current rules state that “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.” This could potentially be disastrous for financial centers in London and Luxembourg and lessen Europe’s appeal as a place to do business.