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

Quote from Robert A. Green:

The small EZ countries will probably fall under blitzkreig.
More...

I don't think Malta or Luxembourg will fall easily. The FTT would be financial suicide for them. A significant part of their financial sectors will pack their bags and move to Switzerland or the UK.
 
Quote from Explorer:

Germany and France said a City tax will be part of a new European treaty in an aggressive move that will force David Cameron to concede defeat or allow the eurozone to advance without Britain.

Angela Merkel and Nicolas Sarkozy defied the Prime Minister's threats and announced a Financial Transactions Tax (FTT) will be part of the proposals for the EU treaty they want leaders to ratify on Thursday.

http://www.telegraph.co.uk/finance/...comes-under-threat-of-downgrade-by-SandP.html
More...

I have officially lost any respect that I once had for either Germany or France. The ftt they are pushing should absolutely not be a part of these treaty changes. They are basically being school yard bullies. Both countries should be ashamed of their leadership.
 
Quote from tomdavis:

I don't think Malta or Luxembourg will fall easily. The FTT would be financial suicide for them. A significant part of their financial sectors will pack their bags and move to Switzerland or the UK.
More...

Hope your right Tom. Luxembourg is a banking and hedge fund haven, and it was a tax haven too. Didn't they buckle already on tax haven or bank secrecy changes?

Question. I know we covered this before.

Wouldn't an EZ-wide FTT, or even just in the big EZ countries, still really hurt the UK and U.S. financial service industries too? Won't the FTT be triggered based on the home base - or headquarters or domicile - of the trader, rather than the location of the exchange? London is the banker to Europe, and so is the U.S. too.

I wonder if this is in contravention of tax treaties. We don't want tax reciprocation, with the UK and U.S passing FTT to retain these tax revenues. Congress will get restless if they see this tax being paid by American companies and people to the EZ rather than keep these taxes for themselves.

I am pretty certain the Germans won't let the UK and U.S. off easy on FTT, and charge the tax with as great a reach as possible. With the cascading effect, with players in a chain worldwide, this can't end well.

FTT can't be allowed to see the light of day. The Germans probably thought out this chess game and I hope it doesn't go this way.
 
Quote from Robert A. Green:

Hope your right Tom. Luxembourg is a banking and hedge fund haven, and it was a tax haven too. Didn't they buckle already on tax haven or bank secrecy changes?

Question. I know we covered this before.

Wouldn't an EZ-wide FTT, or even just in the big EZ countries, still really hurt the UK and U.S. financial service industries too? Won't the FTT be triggered based on the home base - or headquarters or domicile - of the trader, rather than the location of the exchange? London is the banker to Europe, and so is the U.S. too.

I wonder if this is in contravention of tax treaties. We don't want tax reciprocation, with the UK and U.S passing FTT to retain these tax revenues. Congress will get restless if they see this tax being paid by American companies and people to the EZ rather than keep these taxes for themselves.

I am pretty certain the Germans won't let the UK and U.S. off easy on FTT, and charge the tax with as great a reach as possible. With the cascading effect, with players in a chain worldwide, this can't end well.

FTT can't be allowed to see the light of day. The Germans probably thought out this chess game and I hope it doesn't go this way.
More...

Luxembourg changed their bank secrecy rules after 9/11 as did many countries. But I don't see them being willing to sit back and do nothing while 30% of their financial sector relocates. Same with Malta. The financial sector is the largest part of both countries' economies.

If Germany/France try to piece together their own mini-EZ FTT zone, they could probably get at least 8 countries to join them. All we can do is hope Malta and Luxembourg stand their ground. They're the ones that have the most to lose. They also stand to gain business from other countries that institute the FTT if they remain a FTT-free zone.

Bottom line: Based on Merkel's statements today, I believe there will be some kind of voluntary FTT covering 10-15 EZ countries. I don't think there's anything anyone can do to stop them. I think they'll announce that it will take effect in 2014 or 2015. They will spend the next year or two trying to get as many countries as possible around the world to join them. They will make it a global cause and considerable pressure will be put on the United States.

The 2012 and 2014 US elections will be absolutely critical if we want to keep the FTT out of our country.
 
Quote from Robert A. Green:

Wouldn't an EZ-wide FTT, or even just in the big EZ countries, still really hurt the UK and U.S. financial service industries too? Won't the FTT be triggered based on the home base - or headquarters or domicile - of the trader, rather than the location of the exchange? London is the banker to Europe, and so is the U.S. too.

I wonder if this is in contravention of tax treaties. We don't want tax reciprocation, with the UK and U.S passing FTT to retain these tax revenues. Congress will get restless if they see this tax being paid by American companies and people to the EZ rather than keep these taxes for themselves.
More...

Derivatives trading will move out of any FTT country, as derivatives can be done anywhere. Of course any firm unluckly enough to be inside a FTT country will still have to pay, but firms outside (eg US Firms) wont have too. Lets say Eurostoxx50 futures which are currently trading in Germany move to London or the CME. German firms will pay the tax to trade this contract but us and uk firms wont have too.

Spot FX will be exempt.

That leaves share and bond transactions.

Share transactions have to be reported back to the issuing country register so are hard to avoid. Is the same true for bonds?
 
Thanks Tom and Southall. My fear is an exploding FTT bombshell. Am I right with my below comment just made on WSJ? Need to flush out the reach language again, and anew when we see the updated details.

UK Leader Cameron will Have Key Role in Talks.
http://online.wsj.com/article/SB10001424052970204319004577084572563859352.html

Green Comment:

The German-demanded EZ-wide financial-transaction tax (FTT) drops like a bomb on London. Many in the U.S don't realize it drops like a bomb on NYC and Chicago too, with American tax dollars being forked over to Germany's EZ. Why is Secretary Geithner not helping Cameron block this harmful tax? Geithner repeatedly said he and President Obama are against FTT and support a bank levy instead. If this FTT is allowed to snowball, starting in the EZ, it will lead to a worldwide market crash.

It's old news that Cameron will veto an EU-wide FTT. He's now trying to limit the reach of an EZ-wide FTT bombshell from still landing in London. EZ banks and companies executing transactions on London exchanges, or through UK intermediaries - at every stage of a transaction - will be subject to UK counter-parties charging, withholding, and paying this FTT over to the EZ in Brussels. The same goes for U.S. exchanges. Transactions may not flea, since the EZ reach will follow them. Transactions will dry up instead and markets will implode.

Hopefully, Cameron is negotiating to limit that FTT reach-rule language, so its less onerous on the UK. It's a similar problem with bank and fund regulations _getting more onerous from the EU too._
 
Quote from Robert A. Green:

Thanks Tom and Southall. My fear is an exploding FTT bombshell. Am I right with my below comment just made on WSJ? Need to flush out the reach language again, and anew when we see the updated details.

UK Leader Cameron will Have Key Role in Talks.
http://online.wsj.com/article/SB10001424052970204319004577084572563859352.html

Green Comment:

The German-demanded EZ-wide financial-transaction tax (FTT) drops like a bomb on London. Many in the U.S don't realize it drops like a bomb on NYC and Chicago too, with American tax dollars being forked over to Germany's EZ. Why is Secretary Geithner not helping Cameron block this harmful tax? Geithner repeatedly said he and President Obama are against FTT and support a bank levy instead. If this FTT is allowed to snowball, starting in the EZ, it will lead to a worldwide market crash.
More...

You are also looking at this from the viewpoint of reduced transactions from 'FTT zone' countries on the London and US markets.
This is certainly a valid concern.
Clearly any hedge funds and traders that will be badly enough affected will have to relocate outside of any FTT zone. FTT zone banks may also have to relocate outside the zone or try do as many transaction through outside subsidiaries.
But the risks you mention are very real.
 
I hope the rating agencies like S&P score this scorched-earth FTT policy, for the financial and other tax base moving out of the FTT zone, and income and capital gains taxes dropping significantly.
 
Quote from Robert A. Green:

I hope the rating agencies like S&P score this scorched-earth FTT policy, for the financial and other tax base moving out of the FTT zone, and income and capital gains taxes dropping significantly.
More...

They need tread carefully when it comes to being prescriptive.
 
You must log in or register to reply here.
Back
Top