| LONDON, March 19
LONDON, March 19 A tax on trading in 11 euro
zone countries won't harm Britain and its government cannot be
forced to collect the levy, a senior European Commission
official said on Tuesday.
The European Union executive has proposed a transactions tax
from January 2014 on stocks, bonds and derivatives listed in 11
countries to make banks pay for taxpayer help in the financial
It will also apply in all other countries where there are
trades linked to stocks, bonds and derivatives from the 11
Britain, the EU's biggest financial trading centre by far,
fears its markets will be sucked into the tax, causing a drop in
Italy, included among the 11 going ahead with the tax,
introduced its own levy on share trades this month, triggering a
sharp fall in equity volumes.
"There is no risk that the City of London will be negatively
impacted," Manfred Bergmann, European Commission director for
indirect taxation, told a panel of lawmakers from Britain's
upper House of Lords.
The first task is to finalise the tax so that it works, in
the hope other EU states and countries elsewhere in the world
will join later on, Bergmann added.
Britain, Sweden, the United States and Canada have all
rejected such a levy on trading, also dubbed a Tobin Tax after
the U.S. economist who devised it in the 1970s.
Bergmanm said the Commission remains "silent" for now on how
the tax, estimated to raise up to 35 billion euros a year, will
be collected, especially in countries not taking part.
"There is no extra burden on non-participating member states
to collect the tax. Will the City of London be forced to collect
tax for Germany and France? No," he added.
It was up to the 11 countries taking part to decide how they
wanted the revenue collected, he said.
Germany and France led the pressure for the Commission to
draft proposals for a levy by a core group of countries after
failing to win backing for an EU-wide measure.
Some lawmakers doubted if the tax would ever be introduced,
while others quizzed by the panel saw huge hurdles to getting
non-participating countries to cooperate.
"I don't think the Americans are ever going to introduce
this," said Richard Woolhouse, head of tax at the CBI, a UK
The United States will see the cross-border reach of the tax
as a threat, which could have implications for a mooted EU-U.S.
trade deal, Woolhouse added.
"Either directly or indirectly, the cost will be borne by
the business sector through a higher cost of capital or lower
returns to savers," Woolhouse said.
John Vella, a senior research fellow at Oxford University's
Centre for Business Taxation, told the panel the tax was "not a
good idea" and would have a negative impact on Britain.
"It will introduce new distortions to competition. We are
going to have new cases of double taxation," Vella said.