Financial transaction tax initiated by the German government was under siege, until the European Union finance ministers recently confirmed that the proposal close to be agreed as the minister has discussed the issue on the implementation of 0.2% tax on shares.
The European Commission, the EU’s executive arm, first proposed a financial-transaction tax in 2011 to make sure the industry made a “fair contribution” after taxpayers bore the costs of the financial crisis. When some member states opposed imposing an EU-wide levy, a smaller group sought a compromise under “enhanced cooperation” rules. Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table.
On October 10, 2016, the Finance Ministers of the 10 EU member states, who work on developing financial transaction tax, agreed on some important measures which form "the core engine" of FTT, following three years of negotiations and many missed deadlines. Even though the progress of the negotiation is stumbled and slow, recently, European Union finance ministers announced that the proposal close to be agreed, although further work remains to be done.
The financial transaction tax proposal would apply to purchases of shares in listed companies headquartered in the EU at a rate of 0.2% or more, according to a text prepared by the German government. Further, such tax would exclude small size business with market capitalization below 1 billion euros ($1.1 billion) Initial public offerings, market making and intraday trading would also be exempt.
Compared to previous proposal, the latest draft is less ambitious since the original plan also covering derivatives and other financial instruments.
To reach the consensus among member states, discussions will be continued to focus on how to share the revenue of the tax among those countries. One option is to fund the EU budget, which is used to finance research projects, investments and other economic activities in member states.
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