ONLY THREE out of 27 member states in the European Union strongly favour a transaction tax on financial transactions, according to research by KPMG.
The European Commission’s proposal for an EU-wide tax on financial transactions is opposed by David Cameron, who has warned that a levy across Europe without similar measures elsewhere in the world would hit European jobs and prosperity.
According to KPMG – which has analysed EC governments’ public comments on the proposed transaction tax and had informal discussions with the governments, only France, Germany and Spain strongly favour a transaction tax.
Seven other governments, including Austria, Italy and Hungary, support the tax subject to conditions, such as it being introduced across the EU or worldwide.
Three governments – Bulgaria, the Czech Republic and Sweden – clearly oppose the transaction tax, KPMG said.
The UK, Cyprus, Denmark, Ireland, Latvia, Luxembourg, Malta and Netherlands governments – are “less positive” about the transaction tax, KPMG said.
In September, the European commission suggested a tax of 0.1% on equity and bond transactions and 0.01% on derivatives, which it said could raise €55bn (£45.7bn) a year. European Union finance ministers are due to discuss the tax in March.
President Sarkozy this week announced proposals for a French financial transaction tax of 0.1% to be introduced in July, regardless of whether the EU agrees to a transaction tax.
Sarah Lane, financial services tax partner at KPMG, said: “With only three countries clearly in favour, the Commission’s proposal obviously has a long way to go.”
“Some of the member states which are nominally in favour of the proposal support this subject to a financial transaction tax being introduced globally, and the reality is that global introduction is not going to happen, at least not in the foreseeable future. So seen from this angle, the prospects of introduction by the EU seem very uncertain.”
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Signed into law by president Barack Obama in 2010, the Dodd-Frank legislation has tightened regulation of the US financial system
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
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