The European Parliaments Committee on Economic and Monetary Affairs on Thursday gave its assent to a report outlining cooperation on a Europe-wide financial transaction tax (FTT).
Further details of the tax are expected early next year when the European Commission puts together its draft legislation for the tax.
Deadline for amendments to the report referred by the ECON committee is Tuesday, Nov. 20 while a subsequent vote will be held next Nov. 29.
The report, a procedural step in the move to harmonize the tax, contains a framework for enhanced corporation among member states, giving consent to begin the legislative procedure.
The 27 finance ministers are expected to vote on the proposal in December (it requires a qualified majority) once the European Parliament has issued its assent. Members of the EPs Committee on Economic Affairs (ECON) will put the matter to the vote, on 15 November. Rapporteur Anni Podimata, a Greek MEP, will push for the report.
Meanwhile, on Nov. 8, the Hungarian Government published a proposal to modify the law on the FTT approved in July.
The reasoning behind the new draft is that the increased FTT will be an important element to cover the budget deficit in 2013 and beyond. In line with previous announcements the general FTT rate will increase from 0.1% to 0.2% while in case of cash withdrawals 0.3% rate will apply effective Jan. 1 2013. As a new element the government extends the FTT to securities and derivatives transactions, while this part of the regulation will come into force only on Jan. 1 2014. Banks and other financial institutions active in Hungary will not be liable to FTT in 2013. From 2014 all securities and derivative transactions will be taxed at 0.1% and 0.01% respectively.
According to EU wide initiatives the rate for securities transactions will be set at 0.1% while in case of derivatives deals investors shall pay 0.01% tax based on transaction volume. Free of payment securities transactions will be taxed too, where the basis for the tax will be the market value of the securities.
The FTT shall be paid by banks based on client transactions however the act does not restrict the banks to pass on the FTT to their clients. The modification proposal is under interpretation by all market participants and the content of it still may change during the discussion and approval process in the Parliament so further updates will be sent on the topic in due course.
Meanwhile, The Netherlands this week confirmed that it may be interested in joining the enhanced Europe-wide co-operation on the FTT. This will make it the 12th state to join the co-operation, along with Germany, Belgium, France, Portugal, Austria, Slovenia, Greece, Italy, Spain, Slovakia and Estonia.
(JDC)