Enhanced Cooperation in the Area of Financial Transaction Tax (Directive)
In 2011, the Commission proposed a Directive for an FTT for the whole of the EU but the required unanimous agreement of the Council could not be achieved. The Commission is now proposing to introduce the FTT by way of enhanced cooperation between eleven Member States. The FTT is intended to generate more tax revenue and increase stability in the financial markets.
The FTT does fulfil its fiscal purpose of generating tax revenue.
The FTT fails to achieve its steering function which is to deter financial institutions from enacting risky business transactions, and to prevent future crises. It will not necessarily increase stability in the financial markets. It also increases the capital costs of companies in the participating countries. The international law principle of territoriality is stretched to its limits by the fact that tax liability arises even where only the other contracting party, or the traded security, originates from a participating Member State. Clarification by the ECJ is imperative.