August 1, 2012 was Day One of France’s new financial transactions tax (FTT).
In a politically significant move, the Government of Francois Hollande legally introduced a 0.2% tax on financial transactions. The French FTT is expected to raise half a billion € in the first year. According to President Hollande, a yet unclear part of the revenue will go towards combating AIDS. In total, about 10% of the revenues will be allocated to “development purposes”, which may include climate policies.
Former President Sarkozy first proposed a tax of 0.1% in 2011. Upon taking office, President Hollande doubled it to 0.2%. The exact allocation is expected to be finalised in autumn.
This step by France paves the way for the nine EU countries (including Germany, Spain and Italy) to proceed with the FTT and possibly include climate change in the causes funded by the collected revenues. However, no mention to social or environmental objectives of the FTT are mentioned in the letter signed by the member states to the Council. This increases worries that the FTT will eventually be used as just another tax that will be used to fund the sovereign debt of the respective states.
The UK Government continues to oppose the FTT, despite in fact that the French tax resembles the UK's “Stamp Duty” (0.5% tax on shares).
An EU FTT is on its way, although not supported by all EU-27. Through enhanced cooperation, at least nine member states (France, Italy, Spain, Austria, Belgium, Portugal, Greece, Finland and Germany) are expected to agree on a common FTT platform, under the support of the EC.