LONDON Jan 16 Some financial derivatives may
have to be ditched from plans to tax financial transactions in
11 euro zone countries to avoid harming sovereign debt markets,
The 11 countries are meeting on Thursday and Friday to
hammer out a revised proposal to tax stock, bond and derivatives
transactions and make banks repay some of the taxpayer money
that kept them going during the 2007-09 financial crisis.
"It should be considered whether some categories of
derivatives should not be included of if their taxation should
be postponed, given for example their nexus with the government
bonds' market and related impact on it," the documents seen by
Reuters and prepared for the two-day meeting say.
Several countries are concerned that the tax could disrupt
their debt markets just as the euro zone is starting to turn the
corner on its debt crisis that saw several members being bailed
out by the wider European Union.
The documents says it's unclear when a derivatives contract
should be taxed, such as when it has been written, traded or
comes to the end of its life.
Removing some derivatives contracts from the transaction tax
would be a boost for France, whose banks are key players in the
The document also considers exempting corporate bonds to
avoid "negative effects on the financing capability of
companies, considering also the difficulties in receiving
funding from the banking sector in the present environment".
In the original proposal, government debt trading on
secondary markets would also be taxed but the document says this
could raise the cost of financing national debts and should be
considered for exemption.
Securitised debt - which some central bankers want to see an
increase in to aid economic recovery and wean banks off central
bank funding - may also need exempting from the tax, the