France says transaction tax should target currency trading

Tue Jul 16, 2013 11:42am EDT

Related Topics

* Finmin says France wants an ambitious trading tax

* Moscovici has been accused of backtracking over tax

PARIS, July 16 (Reuters) - France wants the scope of a proposed European tax on financial transactions to include foreign exchange trading, Finance Minister Pierre Moscovici said on Tuesday.

France is one of 11 European Union countries that has signed up for the new tax on financial transactions, which banks are fiercely lobbying against.

While France and Germany led the push for the tax, Moscovici said last week that a proposal from the European Commission was excessive and needed to be changed.

Moscovici sought on Tuesday to dispel criticism - including some from his own Socialist camp - that he was getting cold feet about a policy originally promoted by France.

"Without ambiguity we want an ambitious tax, which means a wide base, a wider base than what the Commission has proposed," Moscovici told lawmakers in the lower house of parliament.

"I'm thinking in particular about currency transactions," Moscovici added.

Under the proposal from the European Commission, spot foreign exchange trades would not be subject to the tax, though derivatives such as swaps and forwards would be.

Financial market lobby groups have warned that a tax on foreign exchange markets could raise the cost of doing business by up to 700 percent.

Algirdas Semeta, the EU's top official in charge of tax policy, opened the door earlier this month to scaling down the proposed tax, suggesting trades in government bonds should be taxed at a lower rate.

Moscovici said the tax should be devised so that it does not encourage people to make transactions in London or Geneva to avoid paying it. He also said he wanted it to target derivatives trading.

The tax, proposed by the EU executive as a way of making banks contribute to the cost of cleaning up after the financial crisis, resurrects an idea first conceived by U.S. economist James Tobin more than 40 years ago.

The countries supporting it, which include Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia, have agreed to press ahead with the levy despite having failed to persuade all 27 EU member states to sign up. (Reporting by Leigh Thomas. Editing by Alexandria Sage and Gareth Jones)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.