Monday, 27 February 2017

Whatever happened to EU Financial Transaction Tax?

One of the oft quoted pieces when we discuss where companies may move to in Europe after Brexit, is that the incoming Financial Transaction Tax (FTT) will impose future costs. These costs should therefore be set against the benefits of re-locating away from the UK. Overall, the FTT will act a counter-weight to the loss of financial passporting.

So far, so good. The one interesting fly in the ointment is that FTT shows every sign of having been quietly forgotten by the EU.

The last activity on the EU website is from, er, 2014. Whilst in 2015the EU won a court case that meant the UK could not opt-out of any future FTT , nothing more has been seen or heard of it since.

All the initial proposals seem to have been passed, but then countries started withdrawing. Last year, they were down to the nine which would be the minimum required.

Nothing has happened since last year, strongly suggesting with event moving so quickly in Europe that this is now a dead duck. Certainly for the foreseeable future.

Which from a Capitalist perspective is great, as this is a very expensive tax on finance. From a UK perspective a shame, as this would indeed make plenty of firms think twice about the costs of taking on EU domicile only.


Blue Eyes said...

I expect that governments have put this on hold while they formulate a full Get Britain package. Which will ultimately backfire spectacularly...

andrew said...

If they really do go for a full anti UK suite of policies
-as the US works in the same way as the UK, it won't make the US happy
-our only rational response is to go full north Korea or full singapore

Not sure if they will get the implications through their noodles, which will lead to a spicy time and possibly some unfortunate consequences if they go at it half cooked

Nick Drew said...

full suite?

surely 'full menu', Andrew

Blue Eyes said...

Suite? Isn't that the French for pudding?

Graeme said...

Pouding is the French for pudding. But they have more types of afters than just puddings, which can be main courses in the confusing.

CityUnslicker said...

BE - My reading is that not enough govts want it and it will die a death

Nick Drew said...

no, BE, that's SUET pudding

Blue Eyes said...

Graeme, yes I am a big fan of the Pouding Noir.

CU yes maybe they thought about it for a minute... pity they didn't do that before signing up to the Euro.

Anonymous said...

You'd think they wouldn't want to start any nastiness with the UK and that 'it's the economy, stupid' - but the story since 2008/9 crisis is that politics comes first and Greeks and Spaniards who want a job can move. So I quite expect some nastiness.

In which case it's pretty important for HMG to keep its powder dry i.e. NOT give any guarantees to EU citizens in the absence of any guarantees for our people in the EU. This will also get nasty as Heseltine/Clarke/Major/Kinnock/Lords and all the Blairites (answering the Master's call) try to get us to disarm unilaterally before talks start. I wonder if Teresa has the stomach - aye, and the liver, too - to call them out as they deserve - in Heseltine's case I don't think the T word is too strong.

James Higham said...

One suspects the EU has other issues on its mind right now.

andrew said...

...and what is on their mind is lunch.


rwendland said...

I may be showing my ignorance here, but isn't the venerable UK Stamp Duty, about 0.5% on shares, a FTT? Or have I misunderstood the definition of FTT. I realise the EU proposal is for a wider FTT than this, but nevertheless UK Stamp Duty seems to me to be a FTT of sorts.

Historically, there was a Stamp Duty on bank cheques, abolished in 1971 under Heath. A flat 2d per cheque, but still sounds even closer to a FTT.

So is characterising it as an EU idea a bit harsh?