# C_2013271EN.01003601.xml

| 19.9.2013 | EN | Official Journal of the European Union | C 271/36 |
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19.9.2013

EN

Official Journal of the European Union

C 271/36

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Directive — Implementing enhanced cooperation in the area of financial transaction tax’

COM(2013) 71 final — 2013/0045 (CNS)

2013/C 271/06

Rapporteur: Mr PALMIERI

Mr PALMIERI

On 28 February 2013, the Council decided to consult the European Economic and Social Committee, under Article 113 of the Treaty on the Functioning of the European Union, on the

Proposal for a Council Directive – implementing enhanced cooperation in the area of financial transaction tax

Proposal for a Council Directive – implementing enhanced cooperation in the area of financial transaction tax

COM(2013) 71 final - 2013/0045 (CNS).

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 24 April 2013.

At its 490th plenary session, held on 22 and 23 May 2013 (meeting of 23 May 2013), the European Economic and Social Committee adopted the following opinion by 94votes to 38 with 9 abstentions.

1.   Conclusions and recommendations

Conclusions and recommendations

| 1.1 | In line with the positions expressed by the European Parliament (1), and the Committee of the Regions (2) and consistently with its own previous opinions (3), the European Economic and Social Committee welcomes the proposal put forward by the Commission to introduce the world's first regional financial transaction tax (FTT). |
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1.1

In line with the positions expressed by the European Parliament (1), and the Committee of the Regions (2) and consistently with its own previous opinions (3), the European Economic and Social Committee welcomes the proposal put forward by the Commission to introduce the world's first regional financial transaction tax (FTT).

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| 1.2 | While recalling that it had wished to see an FTT applied at global level, the Committee believes that its application at regional level (EU11+ zone) – with the involvement of eleven EU Member States (4) – could constitute an exceptional opportunity, which could lead to its future application worldwide. |
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1.2

While recalling that it had wished to see an FTT applied at global level, the Committee believes that its application at regional level (EU11+ zone) – with the involvement of eleven EU Member States (4) – could constitute an exceptional opportunity, which could lead to its future application worldwide.

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| 1.3 | The Committee reiterates the importance of the enhanced cooperation procedure as a tool that enables Member States to reach the widest possible agreement in certain policy areas laid down in the Treaties (5), thus neutralising the unanimity lock that has often led the EU into a political and economic gridlock. |
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1.3

The Committee reiterates the importance of the enhanced cooperation procedure as a tool that enables Member States to reach the widest possible agreement in certain policy areas laid down in the Treaties (5), thus neutralising the unanimity lock that has often led the EU into a political and economic gridlock.

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| 1.4 | The Committee feels that one of the strong points of the proposed FTT is the fact that it comprises a broad tax base and two low tax rates, which reduces its adverse distorting effects. The Committee believes that the introduction of this tax within the EU11+ will foster the establishment of a single financial market. It thus advocates the FTT coming into effect from 1 January 2014, and advises against phasing-in as inadequate. |
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1.4

The Committee feels that one of the strong points of the proposed FTT is the fact that it comprises a broad tax base and two low tax rates, which reduces its adverse distorting effects. The Committee believes that the introduction of this tax within the EU11+ will foster the establishment of a single financial market. It thus advocates the FTT coming into effect from 1 January 2014, and advises against phasing-in as inadequate.

| 1.5 | The Committee believes that, in order to maximise the impact of the tax on economic growth, the revenue that it raises should be channelled into a programme of investment at national and EU levels capable of delivering economic recovery and jobs in the short term. |
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1.5

The Committee believes that, in order to maximise the impact of the tax on economic growth, the revenue that it raises should be channelled into a programme of investment at national and EU levels capable of delivering economic recovery and jobs in the short term.

| 1.6 | The Committee is pleased to point out that, in order to neutralise or at least reduce to a minimum the risk of financial activities being relocated, the Commission has – in the new FTT proposal – coupled the residence (or territorial) principle (proposed in the original version) with the issuance principle proposed by the European Parliament and strongly supported by the Committee in its previous opinion (6). The Committee draws attention to the fact that cumulative application of these principles could mean that, in some cases, financial institutions in non-participating Member States would also be subject to the tax. The Committee therefore considers that, in line with the European Parliament's proposals, further consideration and negotiations with third countries should be initiated with a view to facilitating FTT collection. |
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1.6

The Committee is pleased to point out that, in order to neutralise or at least reduce to a minimum the risk of financial activities being relocated, the Commission has – in the new FTT proposal – coupled the residence (or territorial) principle (proposed in the original version) with the issuance principle proposed by the European Parliament and strongly supported by the Committee in its previous opinion (6). The Committee draws attention to the fact that cumulative application of these principles could mean that, in some cases, financial institutions in non-participating Member States would also be subject to the tax. The Committee therefore considers that, in line with the European Parliament's proposals, further consideration and negotiations with third countries should be initiated with a view to facilitating FTT collection.

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| 1.7 | In line with the European Parliament, the EESC believes that it would make sense to complement the residence and issuance principles with the ‘ownership principle’. This would make FTT avoidance risky and expensive and secure better application. |
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1.7

In line with the European Parliament, the EESC believes that it would make sense to complement the residence and issuance principles with the ‘ownership principle’. This would make FTT avoidance risky and expensive and secure better application.

| 1.8 | The Committee welcomes the anti-avoidance and anti-evasion changes introduced by the Commission to enhance the administration of the tax. The Committee endorses the introduction of an exemption for primary market transactions involving UCITS (units of undertakings for collective investments in transferable securities) and alternative investment funds (AIFs) in order to foster company financing. |
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1.8

The Committee welcomes the anti-avoidance and anti-evasion changes introduced by the Commission to enhance the administration of the tax. The Committee endorses the introduction of an exemption for primary market transactions involving UCITS (units of undertakings for collective investments in transferable securities) and alternative investment funds (AIFs) in order to foster company financing.

| 1.9 | The Committee regrets that a review of the micro- and macroeconomic consequences of the FTT's application is not provided for until three years after the entry in force of the legislation under consideration. It calls for ongoing checks and controls (annual monitoring) to be carried out by the Commission. This would enable the effects of the FTT to be gauged from the outset and timely corrective action as regards its application to be proposed. |
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1.9

The Committee regrets that a review of the micro- and macroeconomic consequences of the FTT's application is not provided for until three years after the entry in force of the legislation under consideration. It calls for ongoing checks and controls (annual monitoring) to be carried out by the Commission. This would enable the effects of the FTT to be gauged from the outset and timely corrective action as regards its application to be proposed.

| 1.10 | Having previously criticised the insufficient evaluation documentation that accompanied the original FTT proposal, the Committee welcomes the fact that the Commission acted to partially remedy this shortcoming. The Committee points out that, when it comes to assessing the effects of this proposal in quantitative terms, the Commission needs to improve the models currently available, by adapting them to evaluation of policy alternatives. In particular, the Committee calls on the Commission services to produce estimates, where possible, correlated to the actual characteristics of the specific proposals made. |
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1.10

Having previously criticised the insufficient evaluation documentation that accompanied the original FTT proposal, the Committee welcomes the fact that the Commission acted to partially remedy this shortcoming. The Committee points out that, when it comes to assessing the effects of this proposal in quantitative terms, the Commission needs to improve the models currently available, by adapting them to evaluation of policy alternatives. In particular, the Committee calls on the Commission services to produce estimates, where possible, correlated to the actual characteristics of the specific proposals made.

| 1.11 | The Committee regrets that the fact that the FTT cannot be applied to all 27 EU Member States deprives the EU budget of a fundamental pillar for its system of own resources. This system was to restore to the EU the financial autonomy it needs, as originally set out in Article 201 of the Treaty of Rome. |
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1.11

The Committee regrets that the fact that the FTT cannot be applied to all 27 EU Member States deprives the EU budget of a fundamental pillar for its system of own resources. This system was to restore to the EU the financial autonomy it needs, as originally set out in Article 201 of the Treaty of Rome.

| 1.12 | The Committee emphasises that in applying the FTT, the relevant administrative bodies should minimise the risk of evasion and avoidance and reduce the administrative costs involved, by means of the requisite coordination between the Member States. |
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1.12

The Committee emphasises that in applying the FTT, the relevant administrative bodies should minimise the risk of evasion and avoidance and reduce the administrative costs involved, by means of the requisite coordination between the Member States.

| 1.13 | While reiterating the need for careful monitoring of the effects of this tax on pension funds and future pensioners, the Committee does not advocate their exclusion from the scope of the FTT. |
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1.13

While reiterating the need for careful monitoring of the effects of this tax on pension funds and future pensioners, the Committee does not advocate their exclusion from the scope of the FTT.

| 1.14 | In discharging its role as an advisory body to the Commission, the Parliament and the Council, the Committee reaffirms its commitment to the ongoing monitoring of the process by which the Commission's proposal is converted into legislation. |
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1.14

In discharging its role as an advisory body to the Commission, the Parliament and the Council, the Committee reaffirms its commitment to the ongoing monitoring of the process by which the Commission's proposal is converted into legislation.

2.   The Commission's Proposal for a Council Directive implementing enhanced cooperation in the area of a common system of financial transaction tax (FTT)

The Commission's Proposal for a Council Directive implementing enhanced cooperation in the area of a common system of financial transaction tax (FTT)

| 2.1 | The proposed directive (7) mirrors the previous proposal drawn up in September 2011 (8). While not receiving unanimous support in the Council, this proposal did, however, spur 11 EU Member States to make an official request to the Commission on 28 September 2012 that the enhanced cooperation procedure be used to establish an FTT. |
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2.1

The proposed directive (7) mirrors the previous proposal drawn up in September 2011 (8). While not receiving unanimous support in the Council, this proposal did, however, spur 11 EU Member States to make an official request to the Commission on 28 September 2012 that the enhanced cooperation procedure be used to establish an FTT.

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| 2.2 | After assessing the feasibility of this request, and establishing that enhanced cooperation on FTT would not have an adverse effect on the internal market or on the competences, rights and obligations of non-participating Member States, the Commission drew up a decision in October 2012 authorising the enhanced cooperation, which was forwarded to the European Parliament in December 2012 and received the authorisation of the Ecofin Council in January 2013. |
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2.2

After assessing the feasibility of this request, and establishing that enhanced cooperation on FTT would not have an adverse effect on the internal market or on the competences, rights and obligations of non-participating Member States, the Commission drew up a decision in October 2012 authorising the enhanced cooperation, which was forwarded to the European Parliament in December 2012 and received the authorisation of the Ecofin Council in January 2013.

| 2.3 | While this proposed directive essentially mirrors the Commission's original proposal, a number of changes have been included with the aim of: i) ensuring greater legal clarity; and ii) reinforcing anti-abuse and anti-avoidance provisions as requested by the 11 Member States. |
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2.3

While this proposed directive essentially mirrors the Commission's original proposal, a number of changes have been included with the aim of: i) ensuring greater legal clarity; and ii) reinforcing anti-abuse and anti-avoidance provisions as requested by the 11 Member States.

| 2.3.1 | The three original objectives are reaffirmed and bolstered: i) strengthening the single market by neutralising the divergent national approaches to financial transaction taxation; ii) ensuring that the financial sector makes a fair contribution to public finances on a par with other sectors; and iii) promoting investment by the financial system in the real economy. |
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2.3.1

The three original objectives are reaffirmed and bolstered: i) strengthening the single market by neutralising the divergent national approaches to financial transaction taxation; ii) ensuring that the financial sector makes a fair contribution to public finances on a par with other sectors; and iii) promoting investment by the financial system in the real economy.

| 2.3.2 | As in the original proposal, the tax base is broad and the minimum rates are low: 0,1 % for financial transactions regarding shares, bonds, units in collective investment undertakings, money-market instruments, repurchase agreements and borrowing agreements; and 0,01 % for financial transactions involving derivative contracts. |
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2.3.2

As in the original proposal, the tax base is broad and the minimum rates are low: 0,1 % for financial transactions regarding shares, bonds, units in collective investment undertakings, money-market instruments, repurchase agreements and borrowing agreements; and 0,01 % for financial transactions involving derivative contracts.

| 2.3.3 | In order not to hinder the normal course of the real economy, the FTT will not apply to: i) the day-to-day financial activities of citizens and businesses (loans, payments, insurance, deposits, etc.); ii) traditional investment banking activities in the context of the raising of capital, or financial transactions carried out as part of restructuring operations; iii) refinancing activities, monetary policies or public debt management; or iv) primary market transactions involving UCITS and AIFs. Therefore, transactions with the European Central Bank, the Member States' central banks, the European Financial Stability Facility, the European Stability Mechanism, and the EU are to be excluded from the scope of the directive. |
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2.3.3

In order not to hinder the normal course of the real economy, the FTT will not apply to: i) the day-to-day financial activities of citizens and businesses (loans, payments, insurance, deposits, etc.); ii) traditional investment banking activities in the context of the raising of capital, or financial transactions carried out as part of restructuring operations; iii) refinancing activities, monetary policies or public debt management; or iv) primary market transactions involving UCITS and AIFs. Therefore, transactions with the European Central Bank, the Member States' central banks, the European Financial Stability Facility, the European Stability Mechanism, and the EU are to be excluded from the scope of the directive.

| 2.3.4 | The proposal retains the residence or territorial principle, under which if the financial institution involved in the transaction is established in the area of application of the FTT, or is acting for a body based in that area, the transaction is subject to the tax regardless of where it took place geographically. |
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2.3.4

The proposal retains the residence or territorial principle, under which if the financial institution involved in the transaction is established in the area of application of the FTT, or is acting for a body based in that area, the transaction is subject to the tax regardless of where it took place geographically.

| 2.3.5 | To deter relocation outside the area of application of the FTT the issuance principle has been added, as requested by the European Parliament and supported by the Committee. Under this principle, a transaction is subject to the FTT if the financial product concerned is issued by one of the 11 Member States participating in the enhanced cooperation, even if the parties to the transaction are established outside the FTT's area of application or the place where the transaction took place. |
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2.3.5

To deter relocation outside the area of application of the FTT the issuance principle has been added, as requested by the European Parliament and supported by the Committee. Under this principle, a transaction is subject to the FTT if the financial product concerned is issued by one of the 11 Member States participating in the enhanced cooperation, even if the parties to the transaction are established outside the FTT's area of application or the place where the transaction took place.

| 2.3.6 | The combined effect of the two principles (the residence principle and the issuance principle) will neutralise or at least significantly reduce the inclination to relocate outside the FTT area in order to avoid the tax. Indeed, in order to avoid the tax, a financial institution would have to abandon its clients based in the FTT area and cease trading in any financial products issued in that area. Moreover, it is worth bearing in mind that this zone accounts for no less than two-thirds of EU GDP and 90 % of euro-area GDP. This renders imprudent any strategy of non-engagement with this market, in which the uniformity of the taxation of the financial markets is set to contribute greatly to completing the single market. |
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2.3.6

The combined effect of the two principles (the residence principle and the issuance principle) will neutralise or at least significantly reduce the inclination to relocate outside the FTT area in order to avoid the tax. Indeed, in order to avoid the tax, a financial institution would have to abandon its clients based in the FTT area and cease trading in any financial products issued in that area. Moreover, it is worth bearing in mind that this zone accounts for no less than two-thirds of EU GDP and 90 % of euro-area GDP. This renders imprudent any strategy of non-engagement with this market, in which the uniformity of the taxation of the financial markets is set to contribute greatly to completing the single market.

| 2.3.7 | According to the Commission's calculations, the revenue raised by the tax could amount to some EUR 30-35 billion per annum. This is about 60,0 % of the revenue that was previously estimated (EUR 57 billion) when it was planned that the scope of the tax would extend to all EU Member States. This revenue would break down as follows: EUR 13 billion from shares and securities and EUR 21 billion from derivatives. |
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2.3.7

According to the Commission's calculations, the revenue raised by the tax could amount to some EUR 30-35 billion per annum. This is about 60,0 % of the revenue that was previously estimated (EUR 57 billion) when it was planned that the scope of the tax would extend to all EU Member States. This revenue would break down as follows: EUR 13 billion from shares and securities and EUR 21 billion from derivatives.

3.   General comments

General comments

| 3.1 | Over the last few years, a number of EU Member States have approved the application of divergent forms of FTT, thus increasing the risk of diversified taxation harming the internal market (narrow tax bases, different forms of exemption). The introduction of a regional FTT would foster a truly unified financial market, free from the distortion of competition that ensues from inefficient tax systems. |
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3.1

Over the last few years, a number of EU Member States have approved the application of divergent forms of FTT, thus increasing the risk of diversified taxation harming the internal market (narrow tax bases, different forms of exemption). The introduction of a regional FTT would foster a truly unified financial market, free from the distortion of competition that ensues from inefficient tax systems.

| 3.1.1 | For this reason, the Committee believes that the FTT should come into force in line with the Commission's timeframe, i.e. on 1 January 2014, without phasing-in, which, given the existing domestic legislation within the EU11+ Member States, could give rise to delays and technical problems. |
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3.1.1

For this reason, the Committee believes that the FTT should come into force in line with the Commission's timeframe, i.e. on 1 January 2014, without phasing-in, which, given the existing domestic legislation within the EU11+ Member States, could give rise to delays and technical problems.

| 3.2 | As the introduction of an FTT across the 27 EU Member States, while desirable, has not proved possible, the application of such a tax through enhanced cooperation – without detrimental effects on the non-participating Member States – is the route that needs to be taken to ensure its future application EU-wide and globally. |
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3.2

As the introduction of an FTT across the 27 EU Member States, while desirable, has not proved possible, the application of such a tax through enhanced cooperation – without detrimental effects on the non-participating Member States – is the route that needs to be taken to ensure its future application EU-wide and globally.

| 3.3 | The non-application of the tax in the EU Member States could, in some cases, lead to double taxation within non-participating countries. This would affect only a small proportion of transactions and could, in any case, by addressed by bilateral netting agreements. |
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3.3

The non-application of the tax in the EU Member States could, in some cases, lead to double taxation within non-participating countries. This would affect only a small proportion of transactions and could, in any case, by addressed by bilateral netting agreements.

4.   Specific comments

Specific comments

| 4.1 | The Committee highlights the fact that the initial estimate of the long-term macroeconomic effects (over 40 years) of the FTT on Europe's economy has been substantially revised by the Commission, rising from a negative figure of around – 1,76 % to a positive figure of around + 1,0 %. |
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4.1

The Committee highlights the fact that the initial estimate of the long-term macroeconomic effects (over 40 years) of the FTT on Europe's economy has been substantially revised by the Commission, rising from a negative figure of around – 1,76 % to a positive figure of around + 1,0 %.

| 4.1.1 | The estimate that accompanied the initial proposal was modified, with the effects deriving from the effective rates proposed and the ‘mitigating’ effects incorporated into the assessment. This enabled the figure to rise from – 1,76 % to – 0,53 % of GDP (9). |
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4.1.1

The estimate that accompanied the initial proposal was modified, with the effects deriving from the effective rates proposed and the ‘mitigating’ effects incorporated into the assessment. This enabled the figure to rise from – 1,76 % to – 0,53 % of GDP (9).

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| 4.1.2 | The Commission subsequently further modified this assessment, considering that it did not take account of the specific features of the proposal and that it was based on unrealistic assumptions (for instance, that all new company investment was financed with instruments subject to the FTT). Following this correction, the effective long-term negative impact on GDP decreased further to an estimated – 0,28 %. As part of this analysis, the Commission carried out a further impact assessment focusing on the effects of using the FTT revenue as an alternative to other forms of taxation, and as a possible tool for public investment. Under this assessment, assuming revenue of 0,16 % of GDP, the FTT would now have a positive impact on GDP of between 0,2 % and 0,4 % (10). |
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4.1.2

The Commission subsequently further modified this assessment, considering that it did not take account of the specific features of the proposal and that it was based on unrealistic assumptions (for instance, that all new company investment was financed with instruments subject to the FTT). Following this correction, the effective long-term negative impact on GDP decreased further to an estimated – 0,28 %. As part of this analysis, the Commission carried out a further impact assessment focusing on the effects of using the FTT revenue as an alternative to other forms of taxation, and as a possible tool for public investment. Under this assessment, assuming revenue of 0,16 % of GDP, the FTT would now have a positive impact on GDP of between 0,2 % and 0,4 % (10).

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| 4.1.3 | This last hypothesis should, however, still be considered limiting in that, in terms of the total revenue, no account is taken of the element deriving from the tax on derivatives; this element is included in the Commission's proposal and would bring total revenue up from 0,16 % to 0,4 % of GDP, so the FTT would have a positive effect on GDP in the order of 1 % (11). |
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4.1.3

This last hypothesis should, however, still be considered limiting in that, in terms of the total revenue, no account is taken of the element deriving from the tax on derivatives; this element is included in the Commission's proposal and would bring total revenue up from 0,16 % to 0,4 % of GDP, so the FTT would have a positive effect on GDP in the order of 1 % (11).

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| 4.2 | The Commission's analysis shows that the introduction of an FTT can have the most effective impact on the EU's economy where the revenue raised is used – be it at EU or national levels – for funding public investment that can bolster economic growth and employment. |
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4.2

The Commission's analysis shows that the introduction of an FTT can have the most effective impact on the EU's economy where the revenue raised is used – be it at EU or national levels – for funding public investment that can bolster economic growth and employment.

| 4.3 | Over the past five years, which have coincided with the crisis, the Committee has drawn up a series of opinions in which it has advocated the need to rebalance the EU's macroeconomic policies in favour of investment policies to support growth and jobs (12). If the route suggested by the Committee is taken, the revenue deriving from the application of an FTT could thus be most effective if it were indeed used to fund a major programme of investment at national and EU levels. |
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4.3

Over the past five years, which have coincided with the crisis, the Committee has drawn up a series of opinions in which it has advocated the need to rebalance the EU's macroeconomic policies in favour of investment policies to support growth and jobs (12). If the route suggested by the Committee is taken, the revenue deriving from the application of an FTT could thus be most effective if it were indeed used to fund a major programme of investment at national and EU levels.

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| 4.4 | The Committee feels that one of the strong points of the FTT is the fact that it comprises a broad tax base and two low tax rates. These features can minimise the adverse effects of taxes whose narrower area of taxation and higher rates would cause severe market distortions. The Committee therefore stresses the need, on the one hand, to minimise exclusions from the tax base and exclusions of taxable persons and, on the other, to encourage the 11 participating Member States to adopt an approach which, by applying the rates of taxation proposed, will create a genuine single market. |
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4.4

The Committee feels that one of the strong points of the FTT is the fact that it comprises a broad tax base and two low tax rates. These features can minimise the adverse effects of taxes whose narrower area of taxation and higher rates would cause severe market distortions. The Committee therefore stresses the need, on the one hand, to minimise exclusions from the tax base and exclusions of taxable persons and, on the other, to encourage the 11 participating Member States to adopt an approach which, by applying the rates of taxation proposed, will create a genuine single market.

| 4.5 | The EESC is in favour of introducing the ‘ownership principle’, according to which a financial transaction in relation to which no FTT has been levied is not legally enforceable and does not result in a transfer of legal title of the financial instrument in question. |
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4.5

The EESC is in favour of introducing the ‘ownership principle’, according to which a financial transaction in relation to which no FTT has been levied is not legally enforceable and does not result in a transfer of legal title of the financial instrument in question.

| 4.6 | The Committee supports the idea of excluding from the tax base transactions involving UCITS and AIFs, as instruments directly linked to the financing of companies and in order to comply with Directive 2008/7/EC. It should be pointed out that the projected reduction in revenue arising from this exclusion would amount to EUR 4 billion. |
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4.6

The Committee supports the idea of excluding from the tax base transactions involving UCITS and AIFs, as instruments directly linked to the financing of companies and in order to comply with Directive 2008/7/EC. It should be pointed out that the projected reduction in revenue arising from this exclusion would amount to EUR 4 billion.

| 4.7 | While taking account of the need to keep under control any pressures on interest rates on public debt, the Committee endorses the proposal to maintain the exemption for public securities issued on the primary market, while taxing secondary trading in public securities; it would advocate an exemption on the secondary market only for institutions delegated by public authorities to engage in transactions related to the management of public debt. |
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4.7

While taking account of the need to keep under control any pressures on interest rates on public debt, the Committee endorses the proposal to maintain the exemption for public securities issued on the primary market, while taxing secondary trading in public securities; it would advocate an exemption on the secondary market only for institutions delegated by public authorities to engage in transactions related to the management of public debt.

| 4.8 | As regards pension funds, the Committee has previously stressed the need for the effects of the FTT on such funds to be specifically monitored. The exclusion from the tax base of UCITS and AIFs, as well as of government securities in the primary market, is definitely a good thing for pension funds given the structure of their portfolios. |
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4.8

As regards pension funds, the Committee has previously stressed the need for the effects of the FTT on such funds to be specifically monitored. The exclusion from the tax base of UCITS and AIFs, as well as of government securities in the primary market, is definitely a good thing for pension funds given the structure of their portfolios.

| 4.9 | While reiterating the need for careful monitoring of the effects of this tax on pension funds and future pensioners, the Committee does not advocate their exclusion from the scope of the FTT. |
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4.9

While reiterating the need for careful monitoring of the effects of this tax on pension funds and future pensioners, the Committee does not advocate their exclusion from the scope of the FTT.

| 4.10 | The introduction of an FTT, without harming the system's liquidity, would steer pension funds towards long-term investment strategies, and reduce de-stabilising elements such as high frequency financial transactions (13). |
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4.10

The introduction of an FTT, without harming the system's liquidity, would steer pension funds towards long-term investment strategies, and reduce de-stabilising elements such as high frequency financial transactions (13).

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| 4.11 | In applying the new tax, there should be a particular focus on the administrative procedures involved, with a view to minimising both the risks of evasion and avoidance and the administrative costs for Member States and taxable persons. To this end, both the Member States and the Commission, when drawing up the implementing acts regarding the procedures for paying the tax and for checking compliance, should ensure that administrative costs are kept to a minimum and keep a close eye on their evolution. In view of the effects of the proposal, the Committee also urges the Commission to propose measures for ensuring cooperation between financial institutions in non-participating Member States and the Member States to whom the tax is due. |
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4.11

In applying the new tax, there should be a particular focus on the administrative procedures involved, with a view to minimising both the risks of evasion and avoidance and the administrative costs for Member States and taxable persons. To this end, both the Member States and the Commission, when drawing up the implementing acts regarding the procedures for paying the tax and for checking compliance, should ensure that administrative costs are kept to a minimum and keep a close eye on their evolution. In view of the effects of the proposal, the Committee also urges the Commission to propose measures for ensuring cooperation between financial institutions in non-participating Member States and the Member States to whom the tax is due.

| 4.12 | Having previously criticised the insufficient evaluation documentation that accompanied the original FTT proposal, the Committee welcomes the fact that the Commission acted to partially remedy this shortcoming by means of the seven explanatory notes that it provided to go with the impact assessment, in relation to the previous proposal (14) – to which must be added the impact assessment accompanying the present proposal (15). Nevertheless, the Committee points out that there is still a lack of analytical and illustrative documentation on the current state of play in financial market taxation and the revenue raised in the various countries, especially in the EU11+. In particular, there should be a broader assessment of the possible impact on savers and future pensioners, taking account of the various ways in which the tax could be passed on. |
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4.12

Having previously criticised the insufficient evaluation documentation that accompanied the original FTT proposal, the Committee welcomes the fact that the Commission acted to partially remedy this shortcoming by means of the seven explanatory notes that it provided to go with the impact assessment, in relation to the previous proposal (14) – to which must be added the impact assessment accompanying the present proposal (15). Nevertheless, the Committee points out that there is still a lack of analytical and illustrative documentation on the current state of play in financial market taxation and the revenue raised in the various countries, especially in the EU11+. In particular, there should be a broader assessment of the possible impact on savers and future pensioners, taking account of the various ways in which the tax could be passed on.

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| 4.13 | The Committee points out that, when it comes to assessing the effects of this proposal in quantitative terms, the Commission needs to improve the models currently available, adapting them to evaluation of policy alternatives. The Committee thus calls on the Commission to produce estimates, where possible, correlated to the actual characteristics of the specific proposals made. |
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4.13

The Committee points out that, when it comes to assessing the effects of this proposal in quantitative terms, the Commission needs to improve the models currently available, adapting them to evaluation of policy alternatives. The Committee thus calls on the Commission to produce estimates, where possible, correlated to the actual characteristics of the specific proposals made.

Brussels, 23 May 2013.

The President of the European Economic and Social Committee

Henri MALOSSE

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(1)  (2010/2105(INI).

1

(2)  OJ C 113, 18.4.2012, p. 7-10.

2

(3)  OJ C 44, 11.2.2011, p. 81-89, OJ C 248, 25.8.2011, p. 64-67, OJ C 248, 25.8.2011, p. 75-80, OJ C 181, 21.6.2012, p. 55-63.

3

(4)  Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia.

4

(5)  The use of enhanced cooperation is governed by Article 20 TEU and Articles 326-334 TFEU.

5

(6)  OJ C 181, 21.6.2012, p. 55-63.

6

(7)  COM(2013) 71 final.

7

(8)  COM(2011) 594 final.

8

(9)  SEC(2011) 1102 final, Volume 1, p. 52.

9

(10)  EC, 2012, Technical fiche: Macroeconomic Impacts.

10

(11)  Assessment based on the analysis in the European Commission's Quarterly Report on the Euro Area, Vol. 11, No 3 (2012).

11

Quarterly Report on the Euro Area, Vol. 11, No 3 (2012)

(12)  To mention but a few: OJ C 133, 9.5.2013, p. 44, OJ C 299, 4.10.2012, p. 60-71, OJ C 181, 21.6.2012, p. 45-51, OJ C 248, 25.8.2011, p. 8-15, OJ C 143, 22.5.2012, p. 10-16.

12

(13)  Network for Sustainable Financial Markets, 2012, No exemption – the financial transaction tax and pension funds. December. DIW, 2012, Financial transaction tax contributes to more sustainability in financial markets. Discussion Papers 1198.

13

No exemption – the financial transaction tax and pension funds

Financial transaction tax contributes to more sustainability in financial markets

(14)  Published on 4 May 2012 on the dedicated website.

14

(15)  SWD(2013) 28 final.

15

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APPENDIX

to the opinion of the European Economic and Social Committee

The following amendment, which received at least a quarter of the votes cast, was rejected in the course of the debate (Rule 54(3) of Rules of Procedure):

New point 4.7

Add after point 4.6:

| 4.7 | Given the mixed findings of studies into the effects of introducing an FTT, the EESC recommends: carefully monitoring the impact in countries that have already taken this step; taking account of the impact of reduced liquidity on market volatility in relation to costs for specific products used in securing insurance provision and pensions savings; and realistically assessing whether the right balance is struck between actual tax revenues collected and the increased costs of financial services for both businesses and savers at a time of crisis. In the view of the EESC, the results of this monitoring must be carefully analysed and future steps must be quickly adjusted, if necessary, in line with any new findings. |
| --- | --- |

4.7

Voting

| For | : | 64 |
| --- | --- | --- |
| Against | : | 94 |
| Abstentions | : | 25 |

For

:

64

Against

:

94

Abstentions

:

25

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