European Union bureaucrats have proposed a new tax that will hit even U.S. companies, an idea they’ve justified with the kind of “fair share” rhetoric that Americans have recently been hearing from President Obama.
“The tax aims to ensure the financial industry makes a fair contribution to the public purse,” the European Commission explains. “It would also be a way to make banks and other financial services companies pay their fair share of the cost of recovering from the crisis. They were a major cause of the economic downturn and received substantial government support to help them survive.”
Simon Miller of The Commentator explains how the tax works. “In an extraordinary move, eurocrats have expanded the ‘residence principle’ – where a tax is imposed on all trading carried out by resident firms, regardless of where the trade occurred – to include an ‘issuance principle,’” Miller writes. “Essentially, if banks trade shares in Volkswagen between London and New York, that trade will be liable for tax so not only will it hit financial firms, it will hit non-financial companies’ risk management activities as they use stock mechanisms to offset risk. Frankly this is a base grab that ignores all territorial rights and tax jurisdictions and arrogantly extends EU reach into other countries’ tax domain” (my emphasis).
The EU expects to get €30-35 billion annually from the tax. “Some of that could go to the EU’s budget,” the commission explains, before noting the stimulus motive. “The rest of the tax revenues would go to national budgets, to be used like other tax revenues – to reduce debt or invest in growth and jobs, for example.”