Lawyers for the European Commission stood by their analysis of a proposed financial-transaction tax against criticism by attorneys representing European Union member governments.
“It is wrong to assert that the ‘financial markets’ of non-participating member states ‘would be burdened’ with the FTT,” the lawyers said in a rebuttal to the Council of the European Union, which represents the executives of 28 EU states, according to a planning document prepared for upcoming meetings. In a Sept. 6 opinion, lawyers for the group of nations said the tax plan goes too far and would discriminate against countries that don’t participate.
EU officials are due to discuss the transaction-tax plan on Dec. 12, the first such discussion since September. Germany wants speedy action on a European Union financial-transaction tax, the German Finance Ministry said this week.
The Brussels-based commission says the tax is appropriate in affecting companies based in a participating nation and those they do business with, even if business partners are located in a nation that isn’t taking part.
“When financial institutions located in those member states engage in cross-border financial transactions with a counterparty in a participating member state, they no longer limit their activities to their home market,” the commission paper says. “The tax does not create a burden for the financial markets of the non-participating member states, but only for the activities of the financial institutions affecting the market of the participating member state.”
The EU has proposed a tax on stocks, bonds, derivatives and other trades that could be collected worldwide by France, Germany and nine other EU nations that have so far signed up. The plan would charge 0.1 percent for stock and bond trades and 0.01 percent for derivatives, with some exemptions likely on transactions like primary-market sales and trades with the ECB.
“We’ve always been confident about the legality of the proposal and are ready to clarify any misgivings member states might have,” said Emer Traynor, a spokeswoman for EU Tax Commissioner Algirdas Semeta, in an e-mail today.