The European Commission have just released details of their proposal to introduce a Financial Transactions Tax (“FTT”). This follows on from high profile statements of support for the introduction of an EU FTT from the French and German governments. The EU’s proposal envisages that the tax would come into effect from 1 January 2014 and it is the EU’s hope that it would also serve as a platform for the introduction of a global FTT.

Rationale for FTT

The Commission believes that the introduction of FTT would be an appropriate way to ensure that the financial sector (which it currently believes is under-taxed) makes a fair contribution to the cost of the financial crisis having benefited from significant financial support from governments since it began. In addition, the Commission is of the view that an EU level of FTT would help avoid competitive distortions and discourage risky trading strategies.