Transaction tax missing its targets

Tim Wallace
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TOUGH taxes on financial transactions across Europe have devastated market activity and failed to raise as much as politicians hoped, according to new figures out yesterday.

Hungary implemented a 0.1 per cent tax at the start of the year.

But it raised less than half the revenue the state had hoped for, bringing in 13bn Hungarian Forints (£36m) in January.

The poor showing comes as 11 EU countries push to implement a financial transactions tax (FTT) on shares, bonds and derivatives.

France forged ahead on its own, introducing a 0.2 per cent tax on sales of shares of major firms. But that only raised €200m (£169.4m) from August to November, well below to €530m expected.

And Italy launched its FTT this month. Figures from TMF Group suggest it has cut trading volumes by 38 per cent already, while German and Spanish volumes rose.

“The introduction of FTT in Hungary is not going as planned, and many of the assumptions promoted by the proponents of the EU-11 regime will be put into question,” said TMF Group’s Richard Asquith.

The UK opposes the plan with chancellor George Osborne arguing trading will move overseas unless any such tax is global rather than restricted to the EU only.