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

[sheda]

Possible EU FTT scenario:

The governments who aren't bankrupt finally see, ok let me start again.

Governments finally see the absolute dismissal of sound economics on the part of the Europeon officials, having noted it has been replaced with personal ambitions despite any cost, they may finally note that the majority of the crisis has its roots in this cause, they take the appropriate "hands off my economy" action.

 

[listedguru]

Quote from tomdavis:

Possible EU FTT scenario:

1. The EU commisssion proposes an FTT that covers the entire EU (27 countries).

2. The UK, Sweden, the Netherlands and Malta vote against the EU-wide FTT.

3. The EU then proposes a Eurozone only FTT (17 countries).

4. The Netherlands and Malta say they won't participate.

5. The 15 remaining EuroZone countries enact the tax among themselves, and do so in a way that does as much economic damage as possible to the UK, Sweden, the Netherlands and Malta.

6. Financial services companies flee Europe en masse, taking with them hundreds of billions in investment capital, and relocate to the US, Canada, Australia, Singapore, Hong Kong, the Cayman Islands, Dubai, etc.

7. Since Germany is the driving force behind the FTT, the newspaper headline 5 years from now reads: "Germany Destroys Europe -- Again!"

Would the entire Eurozone (17 members) need to vote in favor of the ftt or could it be implemented in the EZ without unanimous approval of all 17 countries? I know you need all 27 EU countries for it to happen there but I'm unclear about the Eurozone level.

I know you mentioned that Malta and the Netherlands might put up a fuss but Ireland might not go along with a Eurozone ftt either.

-Guru

 

[FightTheFuture]

Quote from sheda:

http://www.ft.com/cms/s/0/53d33c34-e924-11e0-9817-00144feab49a.html#axzz1YkMj1apR

EU-27, FTT will cost 1.76 percent of GDP over the long-run, however long that is. Not that the length of time matters as it's a huge loss.

Revenues will be €10bn, I guess annual.

And cost €216bn in lost GDP and millions of jobs...before they raise the tax.

 

[Explorer]

Quote from FightTheFuture:

EU-27, FTT will cost 1.76 percent of GDP over the long-run, however long that is. Not that the length of time matters as it's a huge loss.

Revenues will be €10bn, I guess annual.

And cost €216bn in lost GDP and millions of jobs...before they raise the tax.

Expressing lost GDP in € instead of a percentage really brings home the idiocy of their idea. Who's going to vote for losing €216bn?

 

[sheda]

Same fucking idiots that voted to join the euro?

 

[tomdavis]

Ireland, Poland and the Czech Republic have all said at one time or another that they would vote against the FTT unless the UK was willing to participate. But Ireland received a lot of help from the EU restructuring its debt, so it may be difficult for them to say no. Poland and the Check Republic have very little to lose so they could change their minds for any reason. Even Bulgaria has come out against the tax, but I'm not sure what these smaller countries will do when faced with a vote that doesn't really affect them very much (and a "no" vote may earn them enemies in the EU).

My research shows that there are 7 EU countries with highly-developed financial markets. These countries, as a group, will be paying over 90% of the FTT bill and are also the ones that will lose the most jobs and income/capital gains tax revenues if investment funds and financial services companies relocate outside the FTT zone:

The UK
Germany
The Netherlands
France
Sweden
Ireland
Malta

The other EU countries have very little at stake and are unlikely to vote against the FTT at the risk of making enemies of Germany, France, and the EU Commission. (Though I'm hoping a couple of other countries will vote no just so it doesn't look so one-sided.)

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

Regarding Eurozone rules: My undertstanding is that all EU or Eurozone taxes on the member states require unanimous consent. However, I don't think there's anything stopping a group of countries from getting together and forming a taxation agreement among themselves. It wouldn't officially qualify as a Eurozone tax, but the individual countries would be free to make any arrangement they want among themselves.

I'm not an expert on Eurozone taxation rules so I'm just giving my best guess based on what I've read. If anyone has a more detailed understanding of EU/Eurozone taxation rules, this would be an advantageous time to share your knowledge with us.

Quote from listedguru:

Would the entire Eurozone (17 members) need to vote in favor of the ftt or could it be implemented in the EZ without unanimous approval of all 17 countries? I know you need all 27 EU countries for it to happen there but I'm unclear about the Eurozone level.

I know you mentioned that Malta and the Netherlands might put up a fuss but Ireland might not go along with a Eurozone ftt either.

-Guru

 

[tomdavis]

Swedish Finance Minister, Anders Borg, has been saying for over a year now that the FTT costs will be greater than the revenues. He also said that the FTT will increase unemployment and decrease GDP. An EU commissioner refered to Borg's statements as: "alarmist, and not helpful."

That's what happens when you tell the truth.

Quote from FightTheFuture:

EU-27, FTT will cost 1.76 percent of GDP over the long-run, however long that is. Not that the length of time matters as it's a huge loss.

Revenues will be €10bn, I guess annual.

And cost €216bn in lost GDP and millions of jobs...before they raise the tax.

 

[forex1407]

The question is : is it a tax for institutional, banks ,etc. , or a tax for retail traders. I think in the initial project retail traders are not affected. We need to pay attention to that.

 

[listedguru]

Quote from forex1407:

The question is : is it a tax for institutional, banks ,etc. , or a tax for retail traders. I think in the initial project retail traders are not affected. We need to pay attention to that.

I guess we'll know the answer to that soon enough (hopefully).

I do find it interesting that the European commission says an EU wide ftt would only raise about 10B Euros (annually). I would assume that number includes the UK as they are pushing for an EU wide ftt.

All the numbers previously being thrown around for an EU wide ftt were much higher than that. But then again this version of the ftt doesn't include currencies. I guess the devil is in the details which hopefully we'll find out soon enough.

-Guru

 

[TraDaToR]

I have a question: What about Luxemburg? There is no important exchange per se but a lot of French, German and even Swiss professional traders have structures there...

PS: Over the next 2 years, you should be long fiduciary and trust business in Geneva and Zurich whatever the outcome of this tax proposal.