As reported by the Financial Times, the new German coalition agreement between the conservative CDU/CSU and the centre-left SPD will not change any of Germany’s key EU policies. Stressing the importance of Europe and a stable Eurozone, the coalition partners agreed to stick to Germany’s existing foreign and EU strategies. With one exception: the parties are pushing for the rapid implementation of the Financial Transaction Tax (FTT) within the European Union and insist on widening the FTT scope to include shares, bonds, derivatives contracts as well as currency trades. According to Reuters, the coalition treaty establishes the will from both sides to rapidly implement a broad based financial transaction tax within the framework of the Enhanced Cooperation Procedure in the EU. The coalition believes the tax should be designed in such a way as to prevent tax avoidance but also agree that its effects on pensions, small investors and the real economy have to be assessed in order to avoid negative consequences for end users of financial products. Both parties have also discussed the need to endorse a European banking union with a common supervisory authority and a common resolution mechanism.
As stated here, EuroFinUse supports the creation and the main objective of the European Financial Transaction Tax (FTT). However, we call for the exemption of EU citizens (i.e. retail and non-professional individual investors) from its scope since the FTT proposal in its current form is likely to affect end-users more than financial institutions who have more tools at their disposal to circumvent such taxation. It is about time to align the scope of the FTT with reality and ensure that it targets the huge volume of transactions made by the financial sector instead of those made by users in the real economy.
That being said, EuroFinUse is very pleased to hear that the German coalition agrees with its demands to include Forex (currency markets) - the world’s largest financial market by far - within the scope of the FTT. Any version of the FTT omitting currency markets would be a travesty. With German support, there is some hope for a European agreement to include Forex in its scope.