Q&A: EC developments on the financial transaction tax

On 14 February the European Commission adopted a proposal for a Council Directive implementing enhanced cooperation in the area of the financial transaction tax (FTT). The Commission hopes that the FTT will ensure that the financial sector will properly participate in the cost of re-building European economies and bolstering the public finances of the participating Member States.

Despite the Commission’s enthusiasm to implement the tax it became clear last year that there was only partial support amongst Member States for a common system of FTT in the EU as a whole. Accordingly those Member States who backed the idea resolved to pursue the idea through the ‘enhanced cooperation’ mechanism. The current intention is that 11 Member States (the...