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

[Robert A. Green]

I walked by OWS campers today extricated from Columbus Circle in Manhattan, on the side walk near Trump International. If there wasn't an OWS sign, you would easily mistake them for homeless people living on the street. These people are not the 99%, they are the hapless 1%. It's sad to see. Instead of a tin cup asking for change to buy food, they are sticking up successful taxpayers for billions. The OWS movement seems to be petering out.

In Bob Woodward's book "The Price of Politics," Jack Lew was depicted as a troublemaker in forging a grand bargain. Boehner and his staff didn't want to negotiate with him anymore? Obama also back tracked in negotiations and the two of them sank any grand bargain deal. Jack Lew would be a great mistake for Treasury Secretary. Erskin Bowles is too wedded to Bowles Simpson and the president doesn't like that deal - a 23% tax rate is far too low for Obama.

 

[Rantany]

Quote from Robert A. Green:

[...]
Does the UK and other no voters have enough no votes to defeat EC-11 FTT in the QMV process? Who has the latest vote count?

I'm interested in it too. According to this, they need 258 out of 345 votes for permission to form an EC. The 11 countries and Netherlands have together 188 votes (weighted). So they need 70 out of 157 votes from the other countries. Without UK they need 70 out of 128.

 

[vicirek]

Discussion about extraterritorial reach of EU FTT was very unreal and hypothetical to me until I found this comment:


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U.S. Worried about European Financial Tax


According to The Hill, the U.S. financial industry is worried that a European move toward establishing a tax on financial transactions could hit the United States.

A group of investment and business lobbies wrote to Treasury Secretary Timothy Geithner on Nov. 6 expressing concerns that European nations could seek to impose a global tax unilaterally, and urged the administration to make clear its opposition to such a move.

The letter was signed by the Securities Industry and Financial Markets Association, the Financial Services Roundtable, the U.S. Chamber of Commerce and the Investment Company Institute. "Now is not the time to experiment with policies that experience tells us will impede growth, fragment markets, increase market volatility, destroy savings, and encourage uneconomic tax-motivated decision-making," they wrote.

Attempts to impose a tax on all financial transactions in the U.S. have been pushed by some Democratic lawmakers, but have garnered little attention.

The group notes that 11 European Union members have supported establishing a regional transaction tax that would be extraterritorial, allowing the collection of taxes on markets and traders that have "little or no connection" to those nations, including in the U.S.

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I guess banning EU entities from trading outside EU FTT zone is not an option

 

[zdreg]

Quote from Robert A. Green:

I walked by OWS campers today extricated from Columbus Circle in Manhattan, on the side walk near Trump International. If there wasn't an OWS sign, you would easily mistake them for homeless people living on the street. These people are not the 99%, they are the hapless 1%. It's sad to see. Instead of a tin cup asking for change to buy food, they are sticking up successful taxpayers for billions. The OWS movement seems to be petering out.

In Bob Woodward's book "The Price of Politics," Jack Lew was depicted as a troublemaker in forging a grand bargain. Boehner and his staff didn't want to negotiate with him anymore? Obama also back tracked in negotiations and the two of them sank any grand bargain deal. Jack Lew would be a great mistake for Treasury Secretary. Erskin Bowles is too wedded to Bowles Simpson and the president doesn't like that deal - a 23% tax rate is far too low for Obama.

'The OWS movement seems to be petering out."

here is a different spin on OWS, saying they are gaining new strength.
http://www.washingtonpost.com/natio...3fe388-2b0a-11e2-aaa5-ac786110c486_story.html

 

[listedguru]

Quote from vicirek:

Discussion about extraterritorial reach of EU FTT was very unreal and hypothetical to me until I found this comment:


--------------------------------------------------------------------------------

U.S. Worried about European Financial Tax


According to The Hill, the U.S. financial industry is worried that a European move toward establishing a tax on financial transactions could hit the United States.

A group of investment and business lobbies wrote to Treasury Secretary Timothy Geithner on Nov. 6 expressing concerns that European nations could seek to impose a global tax unilaterally, and urged the administration to make clear its opposition to such a move.

The letter was signed by the Securities Industry and Financial Markets Association, the Financial Services Roundtable, the U.S. Chamber of Commerce and the Investment Company Institute. "Now is not the time to experiment with policies that experience tells us will impede growth, fragment markets, increase market volatility, destroy savings, and encourage uneconomic tax-motivated decision-making," they wrote.

Attempts to impose a tax on all financial transactions in the U.S. have been pushed by some Democratic lawmakers, but have garnered little attention.

The group notes that 11 European Union members have supported establishing a regional transaction tax that would be extraterritorial, allowing the collection of taxes on markets and traders that have "little or no connection" to those nations, including in the U.S.

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I guess banning EU entities from trading outside EU FTT zone is not an option

I just don't see how this ez ftt with extraterritorial would work in practice. I can't see countries getting taxed on their trades and then shipping that money to another country. This just isn't going to happen IMHO. Hopefully they just drop all this extraterritorial talk. If they want to tax their own investors into oblivion thats fine but leave the rest of us alone.

I'm sure the UK and Sweden amongst others arn't going to let this EZ FTT hammer them.

-Guru

 

[Robert A. Green]

Quote from vicirek:

Discussion about extraterritorial reach of EU FTT was very unreal and hypothetical to me until I found this comment:
--------------------------------------------------------------------------------

U.S. Worried about European Financial Tax


According to The Hill, the U.S. financial industry is worried that a European move toward establishing a tax on financial transactions could hit the United States.

A group of investment and business lobbies wrote to Treasury Secretary Timothy Geithner on Nov. 6 expressing concerns that European nations could seek to impose a global tax unilaterally, and urged the administration to make clear its opposition to such a move.

The letter was signed by the Securities Industry and Financial Markets Association, the Financial Services Roundtable, the U.S. Chamber of Commerce and the Investment Company Institute. "Now is not the time to experiment with policies that experience tells us will impede growth, fragment markets, increase market volatility, destroy savings, and ......

Glad to see U.S. financial industry players and organizations waking up to this FTT threat and joining the fight. They will get Geithner and others in the administration and maybe Congress on the case. When the U.S. helps the UK, they can win in Europe.

 

[Rantany]

About the residence principle: If I understand the faq well, I think only EU (EC-11) residents or companies have to pay the FTT, and only if there is also an EC-11 based financial institution involved with the transaction:

Where will the tax be applied?
The tax would be applied on the territory of the 27 Member States of the European Union. It would apply to all financial transactions on condition that at least one party to the transaction were established in a Member State of the EU and that a financial institution established in the territory of the Member State concerned was party to the transaction.

How will the tax be applied in practice to a transaction?
Both parties to the transaction would pay their share of the tax in their country of residence or deemed residence.

But if you don't live in an EC-11 country, you simply can't pay the tax because your country is not involved (and also your share would be 0%). So then the EC-11 resident pays it all (only if there is also an EC-11 based financial institution involved with the transaction).

How will the revenue be collected?
The tax would be paid immediately by financial institutions to Member States on the basis of the transactions undertaken, before netting and settlement. These are normally electronic transactions, in which case the tax would be paid the same day it was due. If the transaction is not processed electronically, the financial transaction tax would be due within three working days so as to allow the manual processing of transactions while avoiding unjustifiable cash-flow advantages.
The financial institutions that are liable to pay the financial transaction tax would have to submit a return to tax authorities. Member States would have to take appropriate measures to prevent tax evasion. Measures would include registration of financial institutions, accounting and reporting to ensure payment, keeping relevant data on financial transactions at the disposal of tax authorities and verifying the correct payment of the tax.

It seems to me, that these financial institutions could only be EC-11 based. I can't imagine that the EC assumes institutions outside EC-11 would cooperate with this.


And regarding to this:

How will the proposal mitigate the risk of the tax being passed on to consumers?
The Commission has proposed that the tax should cover only transactions where financial institutions are involved. The aim is to tax the financial sector, not their clients. The tax would aim at covering 85% of the transactions that take place between financial institutions.
However, in case private households and enterprises were to purchase or sell financial products, financial institutions could pass on the tax. For instance, for a purchase of shares to the value of €10 000 the bank could charge €10, which is not excessive.

Does this all mean, that if a (private) EC-11 resident uses a non EC-11 broker for trading on a non EC-11 market, he doesn't have to pay the FTT (nor the tax would pass on him), because there is no EC-11 based financial institution involved with such transactions? (as required according to that faq)?

 

[vicirek]

Residence Principle in some foreign slang difficult to understand in North America meaning that if you smell EU on counterparty you pay tax as well because for that split second you are French:

Example 2:
A hedge fund established in France enters into a swap agreement with a bank established in
Switzerland.
• FTT is due twice in France at national rate, by the Swiss bank deemed to be established in
France (Art. 3.1.e) and by the French bank.
• If the notional value of the swap was EUR 600.000, and France applied the minimum rate
of 0.01%, each financial institution would have to pay EUR 60 FTT.

Article 3.1:
"For the purposes of this Directive, a financial institution shall be deemed to be established in
the territory of a Member State where any of the following conditions is fulfilled:
(a) it has been authorised by the authorities of that Member State to act as such, in
respect of transactions covered by that authorisation;
(b) it has its registered seat within that Member State;
(c) its permanent address or usual residence is located in that Member State;
(d) it has a branch within that Member State, in respect of transactions carried out by
that branch;
(e) it is party, acting either for its own account or for the account of another person, or
is acting in the name of a party to the transaction, to a financial transaction with
another financial institution established in that Member State pursuant to points (a),
(b), (c) or (d), or with a party established in the territory of that Member State and
which is not a financial institution."

 

[vicirek]

more crapola:

In order to avoid extra-territoriality of the proposed FTT provisions it is also foreseen (see
Article 3.3) that a financial institution shall not be considered established in the territory of a
Member State "in case the person liable for payment of FTT proves that there is no link
between the economic substance of the transaction and the territory of any Member State."
The below box illustrates how this provision could be applied.
Economic substance (Art. 3.3)
Example 1:
A Chinese bank and a Chinese investment firm, who acts in the name of a Chinese branch of
an industrial company established in Germany, conclude a currency futures contract in China
for operations of the industrial company in Germany.
• EU FTT is due at the German rate as both the Chinese bank and the Chinese investment
firm are deemed to be established in Germany (Art. 3.1.e).
• If the notional value of the agreement at the time of conclusion of the future contract was
EUR 600.000, and Germany applied the minimum rate of 0.01%, both the Chinese bank
and the Chinese investment firm would have to pay EUR 60 FTT.
Example 2:
Same case as the first example, but this time it is a commodities (such as steel) futures
contract for operations of the German company in China:
In principle, FTT is due as both the Chinese Bank and the Chinese investment firm are
deemed to be established in Germany (Art. 3.1.e), unless both Chinese companies can prove
that there is no link between the economic substance of the transaction and the territory of
Germany (Art. 3.3). Such proof is not available, however, where the operations of the German
company in China have an impact on the balance sheet of the German headquarter.



In the debate, some advocated adding the issuance principle to the residence principle as
defined in the proposal to better minimise the risks coming from possible avoidance schemes.
This approach would allow to tax trading in at least some financial instruments issued in the
EU even when Article 3.1.a to 3.1.e do not apply. Where applicable, it would also make
taxable cases where two non-EU financial institutions were party to a transaction or were
acting in the name of exclusively non-EU parties to the transaction on certain instruments
issued in the EU, thus transactions where there was no EU party involved at all.

 

[Rantany]

ok, it's clear to me now

I just read the pdf

http://ec.europa.eu/taxation_custom...inancial_sector/fact_sheet/territoriality.pdf