New figures from Italy show that its Financial Transaction Tax (‘FTT’) raised only €159 million compared to the 2013 budget of €1 billion. This has sparked calls to extend the tax to new financial instruments.
Following Friday’s coalition vote by the German SPD party, there will be a new push to introduce a harmonised FTT across 11 EU states and also to bring foreign currency trading into the tax net. The UK is seeking to block the current proposal, but EC lawyers believe this has no grounds.
Italian FTT tax disappoints – proposals to extend tax further
The latest details of tax receipts from the Italian FTT were published by the Finance Ministry this month. The data came buried deep within the quarterly statement of the Ministry, and showed tax receipts of only €159 million compared to the 2013 budget of €1 billion. The disappointing results sparked calls for an extension of the tax to include bonds (as per the EU FTT).
Italian FTT was launched in March 2013 on equities, and then extended to derivatives in September.
Germany to push EU FTT following coalition agreement
Following the SPD agreement on the new German coalition agreement, it is widely expected that there will be a fresh attempt to push for implementation of a harmonised FTT by 11 EU states (including Germany, France, Spain and Italy). The SPD is also looking to extend the tax from the current proposed financial instruments (equities, bonds and derivatives) to include foreign currency trading, which the London financial markets dominates.
EC and UK disagree on legality
George Osborne has already filed a legal case at the European of Justice claiming the extra-territorial element of the proposed tax is in breach of EU law. Whilst this was backed-up by the lawyers of the EU Council, the EC’s own lawyers have claimed that is within the scope of the Enhanced Co-Operation mechanism to require the non-FTT participating countries (such as the UK) to assist in tax collections.
Head of Tax Richard Asquith said:“The German election results will encourage the EC to push for the roll out of the harmonised FTT quickly, despite the awful Italian tax receipts. It looks like the UK will have to put up a staunch legal case at the ECJ to protect the London financial markets.”