“More haste, less speed should be advised to France and Germany as they go full steam ahead to reach agreement on the financial transaction tax by the end of May. Despite lengthy discussions, it is still not clear how it would be applied in the 11 EU states who have signed up to the tax, yet France and Germany believe they can implement this during the next three months.
“The proposed tax has faced a barrage of criticism, notably from the EU Council legal service who raised objections last year around the likely impact on country relationships and the wider global economy, as well as its bearing on long-term growth and jobs. The EU’s own examination of the tax showed that it would shrink the economy, so much so that it believes it unlikely to generate any extra revenue at all.
“FTT, originally conceived as a quick-fix for the current financial woes in the European economy, was expected to generate €30-35bn per annum; however, as the scope of the tax continues to be refined, the potential magical money-making machine is looking a little ‘out of order’.
“Francoise Hollande claims he’d rather have an “imperfect tax to no tax at all”, but asking ten other states to agree to this approach may be more challenging.”
Frédéric Donnedieu de Vabres, Chairman of Taxand, the world’s largest independent global organisation of specialist tax advisors to multinational businesses.