EU watchdog sounds warning over
patchwork transaction tax
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[May 07, 2014]
By Huw Jones
— A tax on stock, bond and
derivatives transactions in fewer than half of European Union member
states would "not be good" for the bloc's securities market, a top
EU regulator said on Wednesday.
The aim of the tax is to make banks pay back some of the taxpayer
money they were given during the 2007-09 financial crisis but the
levy is likely to raise only a fraction of the 35 billion euros
originally hoped for as splits emerge over what should be taxed.
"As a European regulator, obviously I prefer to do something either
with all 28 states or nothing," Steven Maijoor, chairman of the
European Securities and Markets Authority (ESMA) told a conference
organized by AFME, a European banking lobby.
The tax on stock and derivatives trades is set to be implemented by
11 of the EU's 28 member states, a situation Maijoor described as
"not good" for an integrated EU securities market.
A raft of new EU laws are being pushed through to create a single
capital market in Europe to end the fragmentation that bumps up
costs and makes the bloc less competitive compared with the United
The discussion should not be framed in terms of being in favor or
against a tax, but in terms of what kind of tax is being proposed
and its implications, Maijoor added.
Ten of the countries taking part, which include France, Germany and
Italy, but not Britain, the bloc's biggest securities market, issued
a declaration on Tuesday.
The 10 said they would begin implementing the tax in January 2016
for shares and some derivatives trades, two years later than
Slovenia, which also supports the project but whose government has
collapsed, was unable to sign. European Union law requires nine
countries to take part in order for the scheme to proceed.
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Sweden, which is not among the 11 countries, introduced a
transaction tax in the 1980s but was forced to scrap it after
trading in domestic shares began shifting to London.
"We also know that some forms of transaction tax can be devastating
to financial markets like we have seen in Sweden. I would say this
all depends on form, but clearly if you do something we would prefer
to do it with the 28," Maijoor said.
The tax resurrects an idea first conceived by U.S. economist James
Tobin more than 40 years ago. Its supporters view it as symbolically
important in showing that politicians, many of whom have been
accused of fumbling their way through the 2007-09 financial crisis,
were tackling the banks blamed for causing it.
(Reporting by Huw Jones; Editing by John Stonestreet and Louise
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