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

Quote from Robert A. Green:


EC 9 is just over half EC 17 and way short of a majority of the EU 27, on a member basis, not QMV basis. Plus, the EC 9 for FTT looks to be 2 big countries Germany and France plus lots of smaller countries, so it's probably even weaker on a QMV basis for passing an EC9 vote.

If 2 of the big 4 EU members, Spain and Italy stay out - and Germany and France originally counted them in for FTT - isn't EC9 FTT doomed to failure? Doesn't this render EC 9 FTT just a talking point, or red herring? I know Explorer is implying the same thing.

I hope we can count on Spain and Italy to stay out of EC9 FTT. I think the Franco German strategy is to snowball FTT one step at a time. Has Germany lost their leverage with the ECB under Draghi? Maybe, but probably not.
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It depends on how the EC-9-FTT is written. If it doesn't place a tax burden on countries outside the EC-9 zone, then I doubt that any countries will vote to stop it. Countries like the UK, Malta, etc. would benefit from financial firms fleeing the EC-9 zone.

If the EC-9-FTT creates a tax burden on countries outside the EC-9 zone, then I would expect a fight. It will take 88 NO votes to stop it. The UK, Sweden, the Czech Republic, the Netherlands, Luxembourg and Malta have a total of 71 votes. They would have to find another 17 votes to veto the EC-9-FTT.
 
Quote from Explorer:

Thanks Robert

Italy and Spain could well choose to stay out of EC9 but still give their consent through QMV for others to go ahead with EC9, in which case it would probably get enough votes to go through.

However if Germany and France come up with a proposal that threatens other members including the UK, it is just possible they might struggle to get enough votes.

Of course if Italy and/or Spain voted against in QMV it would probably be curtains for EC9 but I'd question whether that is particularly likely.
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Thanks, good analysis Explorer and I agree. If EC9 FTT doesn't hurt them, Italy and Spain will probably not vote against EC9-FTT in a QMV vote. They wouldn't want to enrage Germany.

But, weren't all the recent proposals for EU FTT extra-territorial in reach? I doubt Germany will pass an EC9 FTT without extra-territorial reach, that is so easy to avoid outside the EC9 FTT zone, putting their banks at a great competitive disadvantage, especially with London.

I thinkthe Franco German plan is to get their prior FTT plan with extra-territorial reach passed by EC-9 and have it survive a QMV even with the UK and Sweden voting no.
 
Quote from tomdavis:

It depends on how the EC-9-FTT is written. If it doesn't place a tax burden on countries outside the EC-9 zone, then I doubt that any countries will vote to stop it. Countries like the UK, Malta, etc. would benefit from financial firms fleeing the EC-9 zone.

If the EC-9-FTT creates a tax burden on countries outside the EC-9 zone, then I would expect a fight. It will take 88 NO votes to stop it. The UK, Sweden, the Czech Republic, the Netherlands, Luxembourg and Malta have a total of 71 votes. They would have to find another 17 votes to veto the EC-9-FTT.
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Thanks Tom, good thinking.

I think it's your latter case, EC9 FTT with extra-territorial reach and the planned close fight over QMV. The French and German FMs probably will count the Yes votes at next week's econfin meeting of EU FM in Brussels. They will tweak the plan to get the QMV and the planned loser will be the UK.

For example, I think Finland will say no after that ecofin meeting to joining the EC9 - hopefully that will be the one short vote we need - but they may vote Yes on QMV. They just don't want to be hurt competitively versus Sweden and other Nordic banks.

We are down to battle ground states. Bottom line, the French and Germans want to take a pound of flesh out of banks and finance and the biggest pound of flesh is in UK pounds. They can call it whatever they like, I still think their ultimate goal is to drop this FTT bomb on London and force the UK to the fiscal and banking union table.
 
French already introduced FTT, Spain is working on their version of this tax, Germany has something for HFT. If they vote EU wide FTT then what will happen to French, Spain or Portugal version of FTT? London may say - we have stamp duty - get lost. Will they change it to satisfy Germans or they will shout: we already implemented our version of FTT! This will be fun to watch.
 
Quote from Pasternak:

The residence principle makes no sense to me. If I, as an EU citizen will be required to pay taxes if I trade stocks on NYSE, the US is supposed to have all the hassle of collecting taxes to EU? No way this can be legal?
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I don't think so. I think they are thinking(in their wild dreams ) every French and German based company trading on worldwide exchange will send their trade reports to the tax man or will mandate an accountant to calculate the amount of tax due for the year. The worldwide exchanges won't institute 2 tier pricing for a few european clients, in the end they would prefer having no french or German clients. I'm not even talking about making the non euro counterpart paying half the tax, I 'm just talking about calculating the euro dude tax and sending it to the tax man. Exchanges won't do it.
 
Quote from TraDaToR:

I don't think so. I think they are thinking(in their wild dreams ) every French and German based company trading on worldwide exchange will send their trade reports to the tax man or will mandate an accountant to calculate the amount of tax due for the year. The worldwide exchanges won't institute 2 tier pricing for a few european clients, in the end they would prefer having no french or German clients. I'm not even talking about making the non euro counterpart paying half the tax, I 'm just talking about calculating the euro dude tax and sending it to the tax man. Exchanges won't do it.
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Let's say they do it, then accountants will have a lot to do by setting up corporations all over the world to avoid the tax (?). And what is a German based company? Where the headquarter is? Some compamies might even relocate if it's getting harder to raise capital because of this.
 
"in the end they would prefer having no french or German clients."

financial institutions outside the U.S. already prefer not to have US customers.
 
Quote from Pasternak:

Let's say they do it, then accountants will have a lot to do by setting up corporations all over the world to avoid the tax (?). And what is a German based company? Where the headquarter is? Some compamies might even relocate if it's getting harder to raise capital because of this.
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Yes, where the headquarters are I think. But it's stupid, if a german company is really doing active trading on say a US exchange, they can't pay 0.01% tax( they are not profitable anymore ) so they will relocate entirely or create a subsidiary in the UK or Switzerland for the US activities. Even if they are still marginally profitable( big IF, jedi trader here ), it's stupid to pay it when all your concurrents aren't, so in the end it would be stupid not to relocate. The only people who will not relocate are the firms doing long term trading or firms where the trading activity is marginal( and long term ), but that's not the kind of revenue they are looking for...LOL
 
The real battle will be on the eurex front. I can't see them dying just because a few dumb politicians are deciding so. It was the biggest derivatives exchange in the world at one point. Put a 0.01% tax on bund and 90 % of volume is gone. They will try something to survive but the eurocrats are trying to link derivatives to their countries of issuance, so there will be a huge legal battle. If Eurex can relocate, they will survive and EU will get nothing. If Eurex cannot relocate, they will die and the EU will get...nothing...LOL...lose/lose situation.
 
Italian Finance Minister Vittorio Grilli said Monday that Italy will make a decision on whether to adopt a European tax on financial transactions, or so-called Tobin tax, Tuesday.

Speaking to journalists on the sidelines of a Eurogroup meeting in Luxembourg, Grilli said the country's position will be clear tomorrow after a discussion on the tax with its European partners.

A European Union-wide meeting of finance ministers is expected to discuss the tax adoption Tuesday.

Other than the two proposing countries, France and Germany, the initiative also has the consent of Portugal, Slovenia, Belgium and Austria to date.

"We need to see the outline of the proposal tomorrow to make a decision" said Mr Grilli. He added he will need to consult with Prime Minister Mario Monti on the matter, as it is "a political decision" involving the whole government.

At the moment, Mr Grilli said, Italy's position isn't "completely negative" but the proposal needs to be outlined and maybe modified to get Rome's consent.

A minimum on nine countries are requested to adopt the EU-wide Tobin tax for it to become operational.

http://online.wsj.com/article/BT-CO-20121008-708015.html
 
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