Tuesday

9th Aug 2022

Britain renews attack on EU transactions tax

  • The FTT would hit all euro-denominated trades (Photo: Travel Aficionado)

British chancellor George Osborne has attacked EU plans to create a financial transactions tax (FTT), describing it as "poorly designed, badly timed and unlawfully extraterritorial."

He said it would "hinder EU growth by disrupting the diverse markets used by corporates to raise financing for long-term investment … [and] undermine the single market by splitting tax treatment of derivatives into two regimes."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

He predicted it would also cause "conflict" within the G20, a forum of leading world economies.

Osborne's latest broadside against the levy came in a letter sent on Wednesday (5 June) to Guido Ravoet, the chief executive of the European Banking Federation, a Brussels-based lobby.

Under the EU proposal, trades in bonds and shares would carry a levy of 0.1 percent, while derivative trades would be taxes by 0.01 percent.

The EU executive estimates the tax could raise €35 billion a year for the 11 governments keen to go ahead.

But it has also warned this could come at the expense of a 0.3 percent fall in the bloc's overall GDP, a 15 percent decline in the trade of shares and bonds and a 75 percent reduction in the volume of derivative trading.

High-frequency trading, where thousands of trades are made each minute using computer algorithms, is set to suffer the most.

London, the home Europe's largest financial centre, is keen for the proposal to fail.

It began legal proceedings against it in May at the European Court in Luxembourg.

The City of London is particularly anxious to shoot down the "extraterritorial" clause.

As the EU proposal stands, the FTT would hit all financial institutions in non-FTT countries when making euro-denominated trades with counter-parties inside the EU-11.

Reports indicate some of the 11 countries are ask having second thoughts about the scheme.

Germany does not want to take any decision on the FTT proposal before national elections in the autumn, while Austria and Belgium want to exempt pension funds from the tax.

But the EU commission says this is a normal part of to-and-fro in preliminary talks.

For his part, French central bank governor, Christian Noyer, last week called on EU lawmakers to re-write the proposal to "prevent the risk of destroying entire segments of our financial industry or the offshoring of jobs, as well as the highly counterproductive effects on government borrowing and the financing of the economy."

The Luxembourg-based European Investment Bank (EIB) has also called for an exemption from the scope of the FTT.

Almost two-thirds of Europe in danger of drought

Data released by the European Drought Observatory show 60 percent of Europe and the United Kingdom is currently in a state of drought, with farming, homes and industry being affected. Drought conditions have also led to an increase in wildfires.

Droughts prompt calls to cut water use amid harvest fears

With the prolonged lack of rain and high temperatures, fears have emerged over water shortages and droughts decreasing crop yields — prompting calls to use less water and reuse urban wastewater for agricultural irrigation.

Brazil pitches itself as answer to Ukraine war food shortages

Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.

Opinion

Exploiting the Ukraine crisis for Big Business

From food policy to climate change, corporate lobbyists are exploiting the Ukraine crisis to try to slash legislation that gets in the way of profit. But this is only making things worse.

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Join EUobserver

Support quality EU news

Join us