Because Financial Transactions Are To Be Discouraged!!! EuroZone Makes Move In Race To The Bottom!!!

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Just when you think the US has a lock on winning the race to the bottom, the crazy Europeans come up with something to tighten the race!

EU states get blessing for financial trading tax

BRUSSELS (Reuters) – Eleven euro zone countries won approval on Tuesday for a tax on financial transactions aimed at shifting more responsibility for the region’s crisis onto banks despite fears it could drive business out of Europe.

European Union finance ministers gave their approval at a meeting in Brussels, allowing the states – Germany and France plus Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia – to pursue the contested scheme. …..

“This is a major milestone in tax history,” Algirdas Semeta, the European commissioner in charge of tax policy, told reporters, saying the levy could be imposed from January next year if governments agree on its design quickly.

Under EU rules, a minimum of nine countries can cooperate on legislation using a process called enhanced cooperation as long as a majority of the EU’s 27 countries give their permission.

Britain, which has its own duty on the trading of shares, registered its protest by abstaining in the vote, along with Luxembourg, the Czech Republic and Malta, EU officials said.

Even if Britain and others are out, however, they could still be affected, which is a major concern for London, Europe’s biggest financial centre. If either the buyer or seller is based in one of the countries imposing the tax, the levy can be imposed regardless of where the transaction takes place.

Although critics say such a tax cannot work properly unless applied worldwide or at least Europe-wide, some countries are already banking on the extra income from next year, which one EU official said could be as much as 35 billion euros annually.

Sweden, which experimented with and then abandoned its own transactions tax, has repeatedly cautioned that the levy would push trading elsewhere and found some support for its reservations from Denmark, Portugal, Hungary and Romania on Tuesday, although they did not block the process.

This is a huge step towards the race to the bottom.  I wonder how emerging economies will react?  Further, this is a very strange thought when considering all of the QE going around. 

I think these countries are overplaying their hand.  I don’t regard the EU as the people to go to for future financial transactions.  I think they’re going to be very disappointed by the results of this idiocy.  In the world of competition, the EU is simply handing their economic rivals another weapon in their arsenal. 

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17 Responses to Because Financial Transactions Are To Be Discouraged!!! EuroZone Makes Move In Race To The Bottom!!!

  1. Bring it on !

    The UK will be opting out, so we will be getting loads of business from the continent.

    BTW – At least one of my super bowl picks turned up – Go Ravens!

    • suyts says:

      Yes, but, won’t the business also be subject to the tax? I mean, that’s the catch. They’re imposing this on anyone who would do business with them. But, yes, people from say, the US would be more apt to do business with people in the UK as opposed to the Eurozone. And, I would suspect the same from China and India and the like.

      • Not as I understand it, James.

        Any financial transactions in the Eurozone will attract the tax, but if a German investor, say, invests money in London, he’ll pay no tax.

      • suyts says:

        Well, that’s not what the article stated, though, I don’t know that Reuters would be the authority on this. We’ll have to see the details, of course, but here’s what the article stated….

        Even if Britain and others are out, however, they could still be affected, which is a major concern for London, Europe’s biggest financial centre. If either the buyer or seller is based in one of the countries imposing the tax, the levy can be imposed regardless of where the transaction takes place.

        It seems much like the airliner tax the EU is imposing on the rest of the world.

  2. DaveG says:

    OT – The madness continues:
    Greenpeace’s/ Zero’s Vision for America: Unemployed, Broke, Miserable

    January 22, 2013 at 12:19 pm

    Greenpeace thinks President Obama should destroy lives now. Because of an ill-defined, generalized risk of climate change sometime in the future.

    http://nofrakkingconsensus.com/2013/01/22/greenpeaces-vision-for-america-unemployed-broke-miserable/

    Plus a little bonus:
    Europe Today: Stealing Wood, Burning Wood

    January 20, 2013 at 12:57 pm

    Green energy is expensive energy. In Europe, prices are rising and unintended consequences have followed.

    http://nofrakkingconsensus.com/2013/01/20/europe-today-stealing-wood-burning-wood/

    Beautiful just beautiful!!!!

  3. HankH says:

    The barter system may be making a comeback.

  4. DirkH says:

    Will probably turn out to be 0.1 % per transaction. I’m trading every one of my Euros about 4 times a year so that’s 0.4% loss. Ok, that’s in the noise.

    Daytraders and HFT’s will be taken to the cleaners, though. Volume will collapse. Markets will become more volatile, a new equilibrium on a lower volume, higher volatility level.

    I like volatility.

  5. Bruce says:

    About 75% of the EU financial transactions tax revenue would come from the UK financial sector (if it was applied to the UK), which is why the UK is furious and France is chortling.

    Unfortunately for France, the UK is not stupid. They will never accept it, and therefore EU banks will move their trading desks to London. And insurers. And the traders will go too. So the net result will be that what France and Germany collect in FTT they will lose in income tax and company tax.

    This is so stupid I think this must be a false flag operation by the integrators trying to push the annoying Poms out so they can get on with building utopia.

  6. philjourdan says:

    The great equalizer! Stupidity will bootstrap the third world into the first world.

  7. Bruce says:

    Pollies never learn. In related tax news, again we have the PRC (ie. the Peoples’ Republic of California) shooting themselves in both feet:

    Phil Mickelson apologized for saying he would have to make “drastic changes” due to new U.S. and California tax laws.

    “I’m not going to jump the gun, but there’s going to be some drastic changes for me, because I happen to be in that zone that has been targeted federally and by the state,” Mickelson told reporters. “It doesn’t work for me right now, so I’m going to have to make some changes.”

    What’s the bet, Bemuda, Monaco or Russia?

  8. Latitude says:

    This is exactly like Kyoto….
    Let’s have a majority that do not pay….vote…..to make the minority pay

  9. cdquarles says:

    The banks didn’t cause the financial crisis in the first place. The various governments directly and indirectly caused it. They ‘collectively’ put a gun to their banks’ head and gave them an ‘offer they can’t refuse’, then when the inevitable disaster comes, they put another gun to the banks’ head and repeat the process. Welcome to the Great Depression, V 2.0; Better than the first one. New and improved GD will ‘git ‘er done’. Sheesh. Won’t these people ever learn (nope, of course not… as long as you can get away with ‘blaming the other’, there is no need to learn).

    • philjourdan says:

      One question (or rebuttal) I get to Obama being socialist is that there are still free enterprises. Indeed, if you look at ALL the European Socialists (going back 80 years) that did not jump to all out communism, you see they did not nationalize ALL business.

      Your answer just gave me the answer to their objection. The reason that they do not nationalize ALL business is because they would not have any scapegoats when their policies go wrong, as they always do. They leave some businesses in place so they can blame someone else for their incompetence and malfeasance.

      • cdquarles says:

        True. Fascism is the branch of the Socialist religion that leaves ‘owners’ in place, but the government calls the shots behind the scenes. Communism is the branch of the Socialist religion that openly removes ‘owners’ and simply lets some favored Party members be managers, which the government calls the shots both openly and behind the scenes.

        My rebuttal to them would be to tell me what business I can start without asking the government for permission to own, operate, and expand said business; other than the ‘black market’ ones, where I am subject to criminal penalties if caught and prosecuted. Plus there will always be scapegoats, even in Communism. Remember the purges for failures of the Plan to work?

        Rhetorical question for today. Do people know what Socialism really means, in practice?

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