Transaction Tax Will Boost EU Budget

March 27, 2012 Taxation in EU

Transaction Taxes to Boost EU BudgetBRUSSELS – Countries of the European Union could soon reduce their contributions to the EU budget significantly if a new proposal by the European Commission for Financial Transaction Taxes is approved.

In a press release published late last week the European Commission revealed a revised proposal for a Financial Transaction Tax (FTT) in Europe, suggesting that two thirds of the revenues raised by EU countries through an FTT should be reserved and directly contributed to the EU budget, while the remaining third is to be retained by the government of the country which collected the tax. The contributed funds would offset the payments that EU countries are required to make to the EU budget annually.

According to preliminary calculation prepared by the European Commission, if the proposal is accepted, countries of the European Union would see their annual EU budget contributions fall by a cumulative amount of up to EU 54 billion per year.

The European Commission currently proposes that if a FTT is implemented across the EU, it should be levied on all financial transaction between financial institutions, where at least one party is located within the EU, and charged at a rate of 0.1 percent on all transactions involving shares and bonds, and at 0.01 percent for all transactions involving derivative contracts. The Commission has suggested that the tax should be implemented on January 1st 2014.

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