France, blocks an ambitious Tobin tax at European level – BBC

France, blocks an ambitious Tobin tax at European level – BBC

Paris favors a tax at a minimum, so that in 2012, before his election, Francois Hollande campaigned for a tax on financial transactions ambitious.

In 2012, before his election, Francois Hollande vilified” his real opponent, the world of finance “and campaigned for a tax on financial transactions ambitious. It is at the initiative of France and Germany that the project was launched at the European level in 2011. After multiple blockages, including Britain, the frame was reduced in January 2013 enhanced cooperation procedure with 11 countries, including Belgium, Italy and Spain.

Today, ironically, while European finance ministers will meet on Tuesday in Brussels to try to reach an agreement before the end of the year, Paris favors a tax has minima actually blocks the process. In early November, Michel Sapin has called for a very reduced taxation of derivatives limited to CDS, that is to say, the insurance against the risk of default. Which represent only 3% of total derivatives in the world and are expected to be reduced due to EU regulations.

In contrast, Austria and Germany want a broad base. Angela Merkel held by the political agreement with the Social Democrats SPD, with an ambitious TTF top priority. Berlin is however not at the forefront of this battle, the Chancellor focusing its attacks against Paris on the fiscal front. Except that the opposition also comes from small countries – Estonia, Portugal, Slovakia, Slovenia … – who lack large financial centers expect substantial revenue from the FTT. However, in the context of enhanced procedure, it takes ten signatories.

The initial draft of the Commission which was intended to cover any type of transaction by applying a 0.1% tax on shares and bonds and 0.01% on derivatives could bring as estimated Brussels, 34 billion euros on the perimeter of eleven countries. His goal was ambitious wanting both provide tax revenues to states and limit the excesses of finance that led to the collapse of Lehman Brothers in 2008.

Today, the text under discussion covers more than the actions and discussions are blocking on the perimeter of derivatives. A document dated December 3, signed by Italy, who chairs the Ecofin recognizes that the principles of tax collection are unclear. “As a result, European states struggle to barely 4 billion euros!” Critical NGOs. Worse, if the proposal were adopted Bercy, this would yield much less in Paris that the French tax that taxes the shares of French companies and relates, at best, EUR 700 million per year.

Bercy retreat is attributed to the banking lobby. The minister wants to protect the interests of big banks, a strong presence on the derivatives market, including BNP Paribas, number two in Europe, or Societe Generale. Banks, subject to more stringent regulations under Basel III and bank resolution funds, highlight the risk of relocation. Except final twist, the Ecofin will result in another failure. And reduces all the purpose of a tax early 2016.