Financial Transaction Tax
The Commission originally proposed a tax on financial transactions in September 2011 with the aim that the financial sector makes a fair contribution at a time of fiscal consolidation in the Member States. It was in particular underlined that governments and European citizens at large had borne the cost of massive taxpayer-funded bailouts to support mainly the banking industry.
The original proposal was to harmonize the tax base and set minimum rates for all transactions, once at least one EU financial institution was involved in this transaction. The minimum tax rates foreseen were 0.1% for the trading in shares and bonds, and 0.01% for derivative agreements such as options, futures, contracts for difference or interest rate swaps.
Tax matters are subject to unanimity (i.e. agreement of all 28 EU Member States) and some Member States did not wish for an FTT, a group of 11 Member States (Germany, France, Italy, Austria, Belgium, Estonia, Greece, Portugal, Slovakia, Slovenia, and Spain) agreed to continue working on a tax applying only to their jurisdictions. The proposal concerning these countries was tabled in February 2013 and is being currently negotiated among the 11 Member States within the Council.
In 2013, the legal services of the Council issued a non-binding opinion in which they considered that the legislative proposal was incompatible with the EU treaty on several grounds. In 2014, the European Court of Justice dismissed the action brought by the United Kingdom against the decision authorizing 11 Member States to establish enhanced cooperation in the area of FTT. The 11 Member States have declared they intend to introduce an FTT by January 2016.
Nasdaq has indicated on many occasions why an FTT has the potential to seriously undermine long-term financing as well as growth and jobs. Such a tax will not deliver on its intended objectives and, on the contrary, it will discourage investment and undermine growth and employment in contradiction with the CMU´s aims – as per the European Commission Impact Assessment – it could reduce GDP growth by 1.76% and have negative impacts on employment of -0.20%.