FTT is all over the papers at the moment. As you may remember, FTT was a proposal about a year ago from the European Commission, who thought it might be an easier deliverable than the Financial Activities Tax (FAT).
Work has been going on during the course of the year in the EU Council Working Group, the Group made up of representatives from the 27 member states and the Commission. Interest has recently grown on this topic as François Hollande, the new French president proposed a €57bn (£46bn) version of the FTT at the recent G8 summit. Almost at the same time, the EU Parliament overwhelming voted to support the proposal. But that's a bit like the local primary school supporting a local MP, inasmuch as they have no vote. The European Parliament has no involvement in the negotiations or legislative process.
One of the key concerns with the proposal is that any such tax could undermine the EU trading platforms, though we understand supporters of the FTT proposal think this is not an issue if all the EU Member States adopt the proposal. Further, there is the unanswered question of how to police the regime on non EU platforms (after all, we've seen how some countries have unilaterally opted out of mandatory EU emissions reporting for airlines). It is reported widely that 9 members are in favour of the FTT - that leaves 18 who either chose not to publicly endorse it, or who oppose it. Of the nine, we understand not all would favour a piecemeal approach, with only some EU states implementing the proposal, fearing an intra-European migration of trading. At the weekend, the press reported Germany had agreed the outlines of a European FTT - or more precisely the German political parties were able to agree amongst themselves the outlines of a European FTT.
The UK's position remains unequivocal - it is against an FTT. At the G8, David Cameron stated "It will put up the cost of people's insurance, put up the cost of people's pensions, it would cost many, many jobs, and it would make Europe less competitive and I'll fight it all the way.". At a Treasury briefing last week, that position was repeated out definitively.
The UK opposes the proposal, believes there is no case for harmonisation of FS taxes across the EU, and has pointed out to other Member States that it already has the bank levy and 200 years experience of Stamp Duty (SD) on shares (and has offered to share its experiences with others if they want to implement an interim national solution). A key UK element of SD is intermediary relief - something that undermines one of the key political elements of the current FTT proposal.
Next steps? An orientation debate at EU Council to determine how to move forward, in the light of the obvious division between Members. Fortunately in this respect, taxation is an area within the EU where qualified majority voting does not apply - all 27 member states would need to agree. And as I've alluded to previously, getting that is probably as easy as herding cats…