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Hollande doubles Sarkozy’s transaction tax
02 August 2012
The 0.2% French financial transaction tax is now in place
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FTT
France
France yesterday introduced its much-debated financial transaction tax (FTT) after parliament passed President Francois Hollande’s revised budget for 2012.
Former French president Nikolas Sarkozy had originally proposed a 0.1% rate on all financial transactions but Hollande decided to double it to 0.2%.
France is the first European country to impose a transaction tax and could well lead the way for others to follow. There has also been discussion of an EU-wide tax but these have been stalled by strong opposition from the UK and Sweden.
There is concern that the tax will reduce liquidity in the French equity market, pushing investors to switch to other asset classes or markets in order to avoid the levy.
The tax applies to all publicly-traded businesses with a market value of more than €1bn but does not cover contracts for difference (CFDs) or securities lending and repo transactions.
In the July/August issue of Global Investor/ISF, RBC Investor Services’ Guy D’Albrand explains why he believes the tax will create new opportunities in the market.