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!
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.