Ecosocial Forum Europe

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• Ecosocial Forum Europe
• Conference
• A New Basis to Finance International Duties
• VIENNA JUNE 2006

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Implementationtechnical and legal
aspectsprof. Mr. L.A. Denys
CurrencyTransactions Tax
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Context THE GLOBAL FOREIGN EXCHANGE MARKET

• 
  
  equals forex trading
• annual forex turnover 400.000 à
  500.000 billion one year
• daily forex turnover
  2.000 billion one day
• world financial assets
  120.000 billion
• world gdp
  40.000 billion one month
• world trade (goods services)
  10.000 billion one week
• official development assistance (2004)
  70 billion 15 minutes
• Mill. Development Goals needs (2006) 135
  billion 30 minutes
• Mill. Development Goods needs in 2015 195
  billion 45 minutes
• ! Austria
  2000 billion

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Context THE GLOBAL FOREX MARKET (contd)

• annual turnover 400 à 500.000.000.000.000
• daily forex turnover 2.000.000.000.000
• average value per transaction (payment
  instruction)
• 
  10.000.000
• (200 to 500 million per transaction is not
  abnormal)
• price setting 20 times per minute
• exchange rate can alter several thousand
  times a day
• 40 transactions concluded in 3 days
• 80 transactions concluded within a week

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Context THE GLOBAL FOREX MARKET (contd)

• market share 80 in 11 financial
  centers
• London City 33
• US 18
• Japan 9
• Singapore 7
• Germany 5
• Switzerland 4
• Hongkong 4
• France 4
• remaining 18 8 countries
  account for 14

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Context THE GLOBAL FOREX MARKET (contd)

• market share 90 in 7 currencies
• US 45
• 19
• Yen 11
• 8
• Sw F 3
• CN 2,3
• AUS 2,1

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Context THE GLOBAL FOREX MARKET (contd)

• worldwide market makers 20
• banking system
• UK 17 banks have 75 market share
• US 13 banks have 75 market share
• 10 ww- banking groups have 50 market share

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CTT Estimated Potential Revenue

• globally
  50 to 200 billion
• EU Switzerland 0,01 to 0,02 17-20 to
  30-40 billion
• UNU Wider report
  /- 30 billion
• EU-commission estimates revenues at 0.01
  15 billion

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Currency Transactions Tax

• legistic inspiration of draft treaty
• indirect tax on transactions
• Residence / source / origin / destination
  irrelevant ?
• Market tax mechanism
• taxable transactions
• exchanges of currencies
• financial instruments having equivalent effect
• taxable event payment settlement
• location parties / intermediaries / currency
• taxable persons / tax liability
• Intermediary
• MN O single entity
• Reverse charge - joint liability
• tax rates
• (minimal) normal rate on all transactions within
  bandwidth (e.g. Belgium 0,02 )
• (dissuasive) surcharge only on transactions with
  one currency in excessive fluctuation (e.g.
  Belgium 80 )
• taxation at wholesale level (settlement)

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• CTT is a  GLOBAL  tax
• treaty based
• global tax base
• global localisation
• avoiding international double taxation
• foregoing international tax avoidance
  simplicity compliance costs (transactions
  costs) - minimal rate and world global wholesale
  financial market legal security risk
• collection through global architecture of
  financial sector supervised by Central Bank /
  Prudential supervision, (payment settlement,
  CLSB) MNO
• local implementation (administration
  enforcement), global administrative judicial
  monetary cooperation
• funding of global public goods redistribution
  of resources / democratic allocation of funds
• tax burden on labour household consumption vs
  capital (quid other capital markets)

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Taxation at wholesale level

• central Banks control legal tender (national
  payment systems)
• settlement institutions CLS
• Provided by Central Banks
• Groups 70 fin. org. instit. serves 480 fin.
  memb. cust.
• Aims at 80 market share
• prudential supervision
• intra MNO transactions
• Single entity consolidated approach
• External auditing
• reverse taxation joint liability
• ML legislation EU financial interest

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• Tax avoidance evasion
• delocalisation, deferral, substitution
• payment and settlement system world financial
  architecture
• joint liability reverse charges
• single entity approach MNOs
• external auditors role
• International cooperation in
• administrative tax control and collection tax
• financial police and judicial enforcements
• money laundering regulations Financial
  Intelligence Units

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Unilateral European Ctt Law

• 1. PROCEDURE
• shared competence in tax matters
• MS can introduce EU can harmonize
• unanimity at EU required
• Enchanced cooperation possible
  min. 9
• shared competence in development policy
• in Eurozone monetary surcharge exclusive EU
  competence
• Cooperation ECB
• preferably EU Directive and Member State
  implementation
• (administration)

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Unilateral European CTT law

• 2. SUBSTANCE
• concurrence of EU and CTT objectives
• principles of internal market
• non discrimination vs. Justified
  distinction and acceptable fiscal disparity
• (CTT distinct
  financial market (value fluctuation risk) with
  global economy benefits coexistence of
  Euro and other currencies in principle
  acceptable)
• free movement of capital, e.a.
• - Global and neutral tax base
• - Low rate no market
  distortion
• - Justifications development
  policy and
• monetary policy
• EC Commission Reports 2002 - 2005

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CurrencyTransactions Tax