The EU FTT as an Unsuitable and Unnecessary Proxy Tax
Rita de la Feria
Professor and Chair of Tax Law, University of Leeds | IR Fellow, Oxford University Centre for Business Taxation | Advisory Panel, UK Office for Budget Responsibility
Just finished another article, in co-authorship with Richard Ness, on the proposed European Financial Transactions Tax. The article is due for publication in the Canadian Tax Journal later in the year. In the meantime, here is a short summary; anyone interested in the topic, please send me a message.
"The impact of the 2008/2009 financial crisis on tax policy can hardly be overestimated. Amongst its most significant effects has been a reopening of the debate as to how best to tax the financial sector, the introduction by many European countries of bank levies, and the discussion on the possible approval in Europe of a wider-scoped Financial Transaction Tax.
This article focusses in particular on the proposed European Financial Transaction Tax (FTT). It concludes that to the extent that the EU FTT is a proxy tax, it is both unsuitable and unnecessary: unsuitable, since it does not fulfil the aims it sets out to achieve; and unnecessary, as taxation of financial services under a VAT is possible, both in theory and in practice. This conclusion challenges the wisdom, from a policy perspective, of introducing a new proxy tax, when fixing an existing one would most likely yield more benefits, at lower costs. Abolition of the VAT exemption for financial services will not have a regulatory effect, but from every other perspective, it presents itself as the best instrument to taxing the financial sector in Europe."
Senior at SAT
8 年Hello, I'm looking forward your work.China is going to introduce VAT to financial sector in near future. The banks pay their VAT bills after output tax deducing input tax, is there any potential problem applying VAT to financial sector?
Barrister at Overseas Chambers. French & British national. Helping other lawyers, taxpayers and advisors in cross border law and tax issues in English and French. Jersey, English +U K, French, EU law. and taxation.
8 年If you tax Banking Services, you provide a deduction to the VAT registered client, as well as to the Bank. At the moment the Bank pays far more VAT by not being able to deduct its input taxation, except through structured entities. Is that not fiscal punishment enough for the iniquitous Financial sector? If you want to commit the heresy of taxing the creation of money as an exchange mechanism, VAT or the FTT is certainly not the best way to do it.
Global Indirect Tax at Facebook
8 年Good -high level overview Rita, will be interested in reading the full article once published. On your last point to applying VAT to Financial Sector in EU and abolishing VAT Exemption - this could be one way to tax Financial Sector , but do you not think that it will make banking more expensive for consumers