Late last week the European Commission published seven explanatory notes that provide the results of further analysis and clarification on how the Financial Transaction Tax (FTT) would work in practice.
Within the notes, the European Commission included analysis into the tax contribution of the financial sector, residence principle and territoriality, relocation, revenue estimations, tax collection and pension funds; with the European Commission claiming that through the FTT, the financial sector will properly participate in the cost of re-building Europe’s economies and bolstering public finances.
The notes provided by the European Commission also advocates that the proposed tax will generate significant revenues and help to ensure greater stability of financial markets, without posing undue risk to EU competitiveness.
However, the proposals have still be rejected by the Prime Minister, David Cameron; whilst on the same day the notes were publish, the House of Lords EU Committee slammed the Commissions plans to use the FTT to fund the 2014 – 2020 EU budget.
It has been claimed by the House of Lords EU Committee that the European Commission has “failed to make a case for the tax” and they have suggested that if the tax was to be introduced, the UK could account for 71% of the revenue it would raise.
Andrew Heskin specialises in accountancy and taxation advice for SMEs.