Estonia recently withdrew from a proposed deal citing concerns about the new European financial transactions tax. The Telegraph reported that while U.K. Chancellor George Osborne has unveiled plans for a European financial transaction tax it still seen as “very uncertain”.
Eurozone nations did not get too far this week on reaching a deal regarding the controversial financial transaction tax issue, however, it is expected that the nations should reach an agreement by mid-2016.
Under the financial transaction tax deal, which was proposed in 2011, banks and major investment powerhouses will be expected to cover the excess that led to the 2008 financial meltdown and the debt crisis across Europe.
The proposed tax has received strong support from France and Germany but while 10 Eurozone countries released a one-page agreement highlighting a number of “core issues”, Estonia held out earlier this week citing concerns that it will not be able to fully implement the tax by January 2016.
According to the Huffington Post, about a year ago, France proposed to make the implementation of this tax easier by completely removing derivatives trades and by setting tax on only the net value of securities transactions at the end of the trading day. If these proposals went into effect then the revenue burden and regulatory benefits of the tax would have been significantly reduced.
Industry analysts believe that while getting countries to sign on to support the new tax deal, it does not cut back on the systematic risks that exist.
“Getting so many countries to agree to an international financial tax is no mean accomplishment, said Avinash Persaud, former senior executive of JP Morgan, UBS and State Street in a statement. “This illustrates the importance of reducing the systemic risk caused by excessive churning of portfolios and ensuring the financial sector contributes to the costs of financial crises.”
Here's how some reacted to the news on Twitter earlier this week: