October 16, 2013 / 9:54 AM / in 4 years

French government against intra-day financial trading tax

PARIS (Reuters) - The French government opposes extending a financial transaction tax to intra-day trades, a move backed last week by the finance committee of the lower house of parliament, France’s budget ministry said on Wednesday.

The upper house of parliament has yet to vote on the amendment to the 2014 budget bill that from September 2014 would apply the tax to transactions opened and closed on the same day.

Such transactions make up more than half the daily volume on Euronext Paris.

“The government is not in favor of the amendment on the financial transaction tax, aimed at expanding into intra-day transactions,” said a source in the office of Budget Minister Bernard Cazeneuve.

That opposition could effectively quash the amendment, which would have to be backed by the full National Assembly later this month and subsequently by the Senate, both of which are under left-wing control.

Since its August 2012 launch, the 0.2 percent financial transaction tax has weighed on French stocks and worried investors, some of whom have shifted their trade to untaxed zones of the market.

The European Commission is mulling a financial transaction tax to be implemented in the EU as a whole. So far, only 11 countries led by France and Germany have agreed to press ahead with the levy, which has encountered opposition from banks.

The Socialist lawmaker who proposed the amendment to the budget bill, Christian Eckert, says taxing intra-day trading will curtail market volatility. Proceeds from the tax are estimated to reach 600 million euros.

The final vote on France’s 2014 budget is due in December.

Reporting by Jean-Baptiste Vey; Writing By Alexandria Sage; editing by Mark John

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