France and Austria bring forward new plan for financial transaction tax

 
Guy Bentley
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London has been a fierce opponent of FTT (Source: Getty)

France and Austria have unveiled plans to reintroduce the financial transactions tax (FTT) at a lower rate but across a wider range of areas.

Talks over the controversial tax have been deadlocked over what transactions it should apply to and at what rate. France and Austria have sought to the break the inertia with a joint letter to their partner countries.

Different countries have been lobbying to exclude financial transactions that are prominent in their own financial services industries. To overcome other members' scepticism, France and Germany hope lowering the rate of FTT but applying it more broadly and equally will satisfy all the parties concerned.

Austrian finance minister, Hans-Joerg Schelling, wrote:

This fresh direction would be based on the assumption that the tax should have the widest possible base and low rates.

France's finance minister Michael Sapin added that the tax would need to be carefully designed to ensure financial services industries did move away to lower tax regimes such as Hong Kong or Singapore.

It was also suggested that a single minister from one of the 11 countries involved should take charge of driving the policy forward. Britain has by far the largest financial services sector in the EU and has been a vocal opponent of the tax.

Last year, the European Court of Justice threw out a pre-emptive challenge by the UK government. According to the City of London Corporation, the original FTT would cost UK households £3.6bn - equivalent to 0.2 per cent of UK GDP.

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