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Financial transaction tax

Published on February 2, 2012
Reply given by François Baroin, Minister for the Economy, Finance and Industry, to a question in the National Assembly (excerpts)

Paris, February 1, 2012

You’re right to recall that France has been in the vanguard of this debate in the international arena about a contribution by the financial industry to resolving the global crisis we’ve been experiencing since 2009.

France was in the vanguard in the framework of the G20 presidency. We got movement on the policies, we got movement from diplomats on the issue, and we’re moving in the right direction. (…)

You ask two key questions. First of all, how will this tax prevent relocations? Precisely through the decision we’re taking to tax listed companies and not shares. If we’d taxed the shares quoted on the Paris stock exchange, we would have prompted relocations. But since we’re choosing to tax listed companies, wherever the shares are traded, we’re preserving jobs and their location. In a way, this system is inspired by the one currently in force in Britain: stamp duty. (…)

Secondly, how does this system differ from the stock exchange tax?

First of all, it has a wider base and no ceiling; that way it will bring in four times more. But we also ensured there would be no impact on the revitalization of economic activity, and that’s one of the reasons we ruled out taxing corporate bonds, in addition of course to government bonds: to avoid penalizing the institutional investors who support our debts.

We have, on the other hand, decided to tax highly speculative derivatives and high-frequency trading. In this respect, the tax will prefigure the European tax./.

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