French push for Tobin Tax is politically motivated
France’s pledge to implement the financial transactions tax this year is political and could harm asset managers and investors, fund selectors, researchers and business leaders across Europe have said.
France is keen to push forward implementation of a pan-European financial transactions tax (FTT) which is currently being reviewed by the European Commission. According to the Commission’s September 2011 proposal, the tax would not come into effect before 2014.
Yet in an interview with French radio station Radio Monte Carlo, Nicolas Sarkozy’s advisor Henri Guaino said France would “set an example” to Europe by making a decision on the implementation of the FTT before the end of January.
“It would be better if Germany participated, and I hope Germany will implement the tax with us. France is hopeful its example will be followed [by its European neighbours],” Guaino said.
Guaino’s comments echoed those of the French minister for Europe, Jean Leonetti, who stated two days earlier the FTT “is on the programme for the next European summit [on January 30]. Nicolas Sarkozy and Angela Merkel have decided on this and it will be put in place before the end of 2012.”
But Germany has said it is in no hurry to push forward with the tax without backing from the rest of the European Union. According to the spokesperson for German parliament, Steffen Seibert, “Germany’s position remains unchanged….our goal is to reach agreement on the implementation of a financial transactions tax throughout the European Union.”
Whether the tax is implemented in 2012 or later, many in the financial industry suspect the main driver for France’s push is the country’s upcoming elections in April. They are also unhappy about its potential impact on end investors and the asset management community – which, they say, were not to blame for the financial crisis.
Anne Delon, fund selector at French group Fideas Capital, said political sentiment is adding momentum to the debate about the FTT. “In the current climate, resuscitating the Tobin tax idea is obviously the “politically correct” move…like low-hanging fruit in a big election year,” she commented.
Delon added the potential tax is on the radar of asset managers and fund selectors alike as the political debate intensifies, although she noted its relevance to this community within the financial sector would depend on the tax’s finer details, which need to be clarified.
Camille Thommes, director general of the Luxembourg fund association (Alfi), emphasised how damaging the tax could be for the European fund industry. He said it would “potentially end the distribution of fund products outside Europe as they will inevitably become less attractive and will consequently have a serious impact on the European asset management and fund industry.”
Peter de Proft (pictured), director general of the European Fund and Asset Management Association (Efama), agreed with Delon that “this is starting to be a political situation. Politicians think it is payback time for financial institutions…unfortunately we [asset managers] are put in the same set of financial institutions, despite having nothing to do with the financial crisis.”