WS1

WS1

Wednesday, January 15, 2014

FINANCIAL TRANSACTION TAX (FTT)

Now scheduled to go into effect in mid 2014 if the there is an agreement before the end of 2013 if addressed .by member states.

Additional revenue is always welcomed. Harmonization of taxes across the EU is also a positive step. Another purpose of the tax was for the financial services industry to pay back some of the money they received during the credit crisis.

But will the imposition of this tax drive participants and / or transactions to offshore markets?  Will all transactions be taxed? What about financing transactions such as “Repos” and transaction types that don’t currently exist?

A new tax sends a signal to the business affected and often has negative consequences.  I have seldom seen a new tax or fee that has raised the estimated revenues. In this era of global markets perhaps a better alternative is to reduce or eliminate existing taxes to attract new business raising income levels and in-turn tax revenues.

The following questions must be addressed before proceeding to provide clarity and ensure that undesired effects are avoided.

Does this tax really make sense?

What‘s the purpose?

   What can the unintended results be?