Sarkozy Transaction Tax May Drive Investors From French Stocks - Businessweek
http://www.businessweek.com/news/20...x-may-drive-investors-from-french-stocks.html
Sarkozy's FTT declaration seems entirely politically motivated, and an act of desperation for him to honor his pledge last year as rotating head of the G-20 and G-8. If you can't honor a pledge, how can you ask to be re-elected?
Isn't Sarkozy's latest FTT plan pretty watered down in reality, and perhaps grandeur in political rhetoric? Is it more like UK stamp duty with market-maker exemptions and applying to retail transactions only, going beyond shares to derivatives, and CDS, but not bonds and more? HFT won't get a market-maker exemption. Plus, it's .1% on shares versus the UK .5% on shares (only).
France is also jumping first before the EU or euro zone - the EP and German's want EU wide - to keep the FTT revenues for themselves in France, justifying it with offsets to their payroll taxes (reduction).
Is this a full FTT or is it stamp-duty plus? Sarkozy gets more political capital calling it FTT. Even if banks are exempt as market makers, they lose business from retail brokerage, so it clearly hurts French banks.
Maybe, I am missing something here, but this news may not be more than a nuance for us. Sarkozy is proposing a cousin of UK stamp duty, and he will probably lose his election beforehand anyway, before it passes. Sarkozy's actions will probably drive more countries to skip FTT, or weaken it in the eurozone rather than snowball it. Why follow Sarkozy's mistakes, especially after he loses the election?_
Would Strauss-Kahn, the presumed Socialist candidate have said no to FTT? His IMF had been against it. His scandal could have big implications for us.
Am I missing something here, or is Sarkozy really mostly irrelevant now? Can he still win? If he does win, he might flip flop and say the EU should take the lead again on FTT, too.
If Hollande wins, French business will be in shock and very scared. So, will foreign investors. Hollande will have to act cautiously, to avoid more sticker shock on socialists policies. Expect more studies as he promised, and some caution. Hollande will need to find common ground with Merkel, and she is not in a socialist party. Hollande will be at odds with Cameron. France won't want to be stigmatized and ostracized either.
