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

bjw · Dec 13, 2011

that does confirm how the treaty that was announced friday really can not be extrapolated to the ftt in any way.

sweden (see above), czech republic, cyprus, malta, ireland, luxembourg, ireland -> all countries that, unlike the uk, are in or undecided on friday, but are dead set against an ftt. a eu-commissioner travelled to malta last week in an attempt to persuade the malta government, but got nothing. i'm still completely clueless as to how merkouzy would be able to press through on this ftt, even in the eurozone. it's unclear they even have a majority behind them in the eurozone. let's not overestimate the germanfranco power here, these are still all sovereign countries which i'm convinced will not back down. one country can perhaps be bought off with all kinds of additional concessions, but i really don't see this happening with all countries that are against.

best thing that could happen to kill this thing fast is the +/- 8-10 countries that really want this, go at this alone. the less countries are in, the faster this thing will be dead.

pescador · Dec 13, 2011

Quote from bjw:

i'm still completely clueless as to how merkouzy would be able to press through on this ftt, even in the eurozone.

It's easy.
As soon as the "treaty" is ratified by them, the new qualified majority rule (85%)
will be binding for them. Effectively they give up their sovereignity.
They will have no chance to veto it any more.

zdreg · Dec 13, 2011

Quote from pescador:

It's easy.
As soon as the "treaty" is ratified by them, the new qualified majority rule (85%)
will be binding for them. Effectively they give up their sovereignity.
They will have no chance to veto it any more.

watch obama jump on board if this scenario comes into existence.

tomdavis · Dec 13, 2011

Quote from pescador:

It's easy.
As soon as the "treaty" is ratified by them, the new qualified majority rule (85%) will be binding for them. Effectively they give up their sovereignity. They will have no chance to veto it any more.

I think I'm missing something...

Sweden and Malta have said they won't accept the ftt unless it's global.

Yet, it appears that they've agreed to a treaty change that would take away their veto power and allow the tax to be forced upon them.

From this information we could conclude:

(a) Sweden and Malta aren't really against the ftt. (They were just kidding at the ECOFIN meeting and in all their other public statements.)

or

(b) Sweden and Malta are irretrievably stupid and don't understand the treaty they're about to sign.

I have a difficult time believing either "a" or "b" is true.

Therefore I think there's something else that's a part of this treaty (or political process) that I'm not aware of.

Can anyone shed any light on this conundrum?

bjw · Dec 13, 2011

Quote from pescador:

It's easy.
As soon as the "treaty" is ratified by them, the new qualified majority rule (85%)
will be binding for them. Effectively they give up their sovereignity.
They will have no chance to veto it any more.

a few essential comments which you really seem to be missing judging from your post:

1. the new qualified majority rule has not been agreed to at all at this point, only discussed to be implemented in the future. several countries (by the far the most vocal and with the most strongest objections has been finland, a eurozone country which ironically is pro-FTT) have been hesitant.
2. regardless of 1, the way things are now there is no way near a 85% majority in the eurozone pro-ftt, so even if that would be agreed to in the end, that still wouldn't clear the path for an ftt.
3. and finally 3, just because they should abide by the EU, doesn't mean all countries will. you're talking about countries like malta and cyrus who don't have all that much going for them except a thriving financial sector. they admit themselves an ftt would kill this overnight, they are not going to agree just like that just because germany wants them too. the same must apply to countries like luxembourg and ireland. again, all countries can be bought with exemptions and such, but there's just too much countries that don't want this.

giving up sovereignity might be in the cards in the distant future (altough i doubt it), but that didn't happen friday whatever you might believe. nothing that was discussed changes anything about europe being hopelessly deadlocked on the ftt, which is a good thing.

pescador · Dec 13, 2011

Quote from bjw:

a few essential comments which you really seem to be missing judging from your post:

1. the new qualified majority rule has not been agreed to at all at this point, only discussed to be implemented in the future. several countries (by the far the most vocal and with the most strongest objections has been finland, a eurozone country which ironically is pro-FTT) have been hesitant.
2. regardless of 1, the way things are now there is no way near a 85% majority in the eurozone pro-ftt, so even if that would be agreed to in the end, that still wouldn't clear the path for an ftt.
3. and finally 3, just because they should abide by the EU, doesn't mean all countries will. you're talking about countries like malta and cyrus who don't have all that much going for them except a thriving financial sector. they admit themselves an ftt would kill this overnight, they are not going to agree just like that just because germany wants them too. the same must apply to countries like luxembourg and ireland. again, all countries can be bought with exemptions and such, but there's just too much countries that don't want this.

giving up sovereignity might be in the cards in the distant future (altough i doubt it), but that didn't happen friday whatever you might believe. nothing that was discussed changes anything about europe being hopelessly deadlocked on the ftt, which is a good thing.

I do hope you are right.
But I am a little bit more pessimistic.
The 85% proposal (even if it is "only" a proposal) is there for a reason.

The only country that opposed the treaty on this summit was UK.
The reason given, why the "treaty" was unacceptable for them was exactly about the FTT.

So if this treaty were not powerful enough to force an FTT upon an unwilling country, why would the UK oppose it?

bjw · Dec 13, 2011

Quote from pescador:
So if this treaty were not powerful enough to force an FTT upon an unwilling country, why would the UK oppose it? [/B]

maybe you've been reading other comments on this than i have, but i was under the impression the uk's veto goes much deeper than just the ftt. what will be in the treaty is the intent of fiscal harmonization and "budget"-cops. from what i understand, but correct me if i'm wrong, the uk is dead-set against any type of harmonization or increasing central power. the ftt might play a role in this, but without any plans for an ftt the uk would have veto-d as well.

looking at it from the opposite perspective: the uk isn't the only country against an ftt (and that's really not just rhetoric, no way sweden will ever adopt an it), yet is the only country that downright veto'd it.

i'm not saying i'm optimistic, but i think it's extremely pessimistic to believe the ftt-battle for europe is lost.

pescador · Dec 13, 2011

Quote from bjw:

maybe you've been reading other comments on this than i have, but i was under the impression the uk's veto goes much deeper than just the ftt.

Yes, it seems. I have read it on several places, including that "Cameron would have accepted the treaty change if it had not included the FTT"

The only ones I remember at the moment are the following:

http://www.bbc.co.uk/news/16131346

"Many in the British government and Parliament had feared that the City would have been unfairly disadvantaged, had they signed up to some of the ideas proposed by eurozone countries such as France and Germany, such as an EU-wide Financial Transaction Tax (FTT).

That's mainly the reason given for the Cameron veto in Brussels."

http://www.telegraph.co.uk/finance/...-veto-was-Germanys-decision-not-Camerons.html

"Merkel and Sarkozy wrote that they wanted the measures to be âenshrined in the European Treatiesâ but quickly added that theyâd be just as happy to go ahead with agreement from the 17.

That letter was the writing on the wall for Cameron: he either had to agree to an FTT (unthinkable) or use Britainâs veto. "

http://www.myfinances.co.uk/investm...s-eu-treaty-changes-over-tobin-tax-safeguards

"It seems that any possibility of the UK agreeing to the new proposals fell down over the UK insisting that it would opt out of any financial transactions tax or Tobin Tax."

bjw · Dec 13, 2011

yet, despite those links, you must agree that what they veto-ed has no mention at all of any ftt, and nothing conclusive on any 85% majority voting.

what was in there:

a commitment to "balanced budgets" for eurozone countries - defined as a structural deficit no greater than 0.5% of gross domestic product - to be written into national constitutions
automatic sanctions for any eurozone country whose deficit exceeds 3% of GDP
a requirement to submit their national budgets to the European Commission, which will have the power to request that they be revised
eurozone and other EU countries to consider, within the next 10 days, providing up to 200bn euros to the International Monetary Fund to help debt-stricken eurozone members

and that's it.

tomdavis · Dec 13, 2011

Quote from bjw:

yet, despite those links, you must agree that what they veto-ed has no mention at all of any ftt, and nothing conclusive on any 85% majority voting.

what was in there:

a commitment to "balanced budgets" for eurozone countries - defined as a structural deficit no greater than 0.5% of gross domestic product - to be written into national constitutions
automatic sanctions for any eurozone country whose deficit exceeds 3% of GDP
a requirement to submit their national budgets to the European Commission, which will have the power to request that they be revised
eurozone and other EU countries to consider, within the next 10 days, providing up to 200bn euros to the International Monetary Fund to help debt-stricken eurozone members

and that's it.

This was posted earlier by guru, but I think it bears repeating as it may shed a little light on the issue.

http://www.timesofmalta.com/articles/view/20111209/local/malta-successful-at-eu-summit.397605

Malta's efforts to keep its economic flexibility paid off this afternoon as a possible introduction of a Financial Transaction Tax and a Common Corporate Tax Base as originally proposed by France and Germany were removed from the final agreement.

"This is a successful summit for Malta as we have managed, albeit with difficulty, to safeguard out national interest," Prime Minister Lawrence Gonzi told a press conference in Brussels after all-night long talks interrupted only for two-and-a-half hours.

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

Also, I spoke to my friend in Stockholm. He said he'd be "shocked" if Sweden approved a treaty that allowed the ftt (or any other EU tax) without unanimous consent. He believes that Malta, Luxembourg, Cypress and the Czech Republic have all taken the same position.

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Edit: UPDATE

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/126658.pdf

I found the Treaty agreement and statement regarding th 85% rule:

Page 6:

In order to ensure that the ESM is in a position to take the necessary decisions in all circumstances, voting rules in the ESM will be changed to include an emergency procedure. The mutual agreement rule will be replaced by a qualified majority of 85% in case the Commission and the ECB conclude that an urgent decision related to financial assistance is needed when the financial and economic sustainability of the euro area is threatened.