Financial Transactions Tax as an Integration Development Instrument in the EU

The adoption of a legal instrument relating to the harmonization of the ten Member States‟ laws on the financial transaction tax could be the first attempt in the EU history to establish an enhanced cooperation in the area of taxation. This project should be considered in the wider context of the financial sphere reform, which was caused by the global financial crisis. The draft Directive implementing enhanced cooperation in the area of the financial transaction tax has been discussed in the Council for 7 years but an accord has not been reached yet. The ambition of the European Commission to enlarge the scope of the financial transaction tax payers as much as possible is perceived by the non-participating Member States as an encroachment of their tax jurisdiction which contradicts the international customary law as well as The Treaty on the Functioning of the European Union. An examination of the reasons of unsuccessful negotiations may lead to a conclusion on drawbacks of the enhanced cooperation in taxation policy. It is not likely that this mechanism would be used in the future to tax a very mobile financial market where the tax base may be easily transferred to the non-tax states. Meanwhile the participation of the leading EU States in the project, a wide public support of the „Robin Hood Tax‟ and Brexit suggest that in the coming months financial transactions in ten Member States will be charged by the harmonized tax. However, the scope of the tax would be reduced in comparison with that in the initial draft of the European Commission.

The financial transaction tax: an ANOVA assessment of selected EU countries

Research background: There are various forms of fiscal taxation of the financial assets. In recent times, the discussion about financial transaction tax in the EU is associated with finding the solution to problems due to great financial crisis. The European Commission has made some efforts to strengthen capital regulation and it has adopted the Directive about implementing enhanced cooperation in the field of financial transaction tax, where it analyzed options and impacts of FTT according to those countries which have already implemented similar transaction taxes in their national legislatives. Purpose of the article: Our aim is to find out the economic relationship between FTT and economic growth and to analyze the effect of FTT within selected EU countries. Methods: In this paper, we will analyze the banking environment in the EU area, and we emphasize the correlation between tax policy and economic growth. We will test FTT through three-way mixed-effects ANOVA, and analyze three Member states, Belgium, Ireland and the United Kingdom, which have very active attitude to implementation of FTT within other EU countries. Findings & Value added: We are interested in: (1) testing the relationship between the financial transaction tax (FTT) and economic growth (GDP); and (2) to verify the hypothesis that FTT could improve GDP growth in a country. We assume that if a country has adopted FTT in its tax system, then it will lead to a significant GDP growth, and so it could lead to financial market improvement after the crisis. Our results have shown that an increase in FTT volume would lead only to a negligible increase in the economic growth.