A proposed EU tax on financial transactions (or FTT) will need to undergo some changes to win enough support for implementation, according to EU Tax Commissioner Algirdas Semeta.
During a European Parliament debate on Tuesday, Semeta said the so-called Tobin tax was at risk, in part because “strong vested-interest groups have worked tirelessly to impede progress, over-estimating the threats and negative impact of this tax.”
Semeta said these lobbying efforts have caused many in the EU to be apprehensive about the tax and newly elected officials in May's elections could prevent its implementation.
If implemented, the tax would hit transactions by private equity fund managers when purchasing or selling shares, bonds or options in portfolio companies.
One notable campaigner against the tax has been private equity trade body the European Private Equity and Venture Capital Association (EVCA). Recent EVCA research revealed the tax would, aside from pure tax costs, result in considerable administrative burdens.
“Each time a transaction is within the scope of the tax it will trigger an array of administrative requirements that…require the affected financial institutions to navigate a non-uniform and complex legal landscape,” said in the study Anita Millar, an industry risk consultant with ADM Risk, Regulation & Strategy and one of the study’s lead authors.
The tax was originally planned to enter into force last month, but disagreements over the minutiae of the rules has delayed its implementation. It is now unknown if the tax will be implemented before the spring EU elections, but Greece, which holds the rotating EU presidency until July, has committed to giving the issue priority.