France’s Noyer hits at ‘Robin Hood’ tax




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By FT

Europe’ planned financial transaction tax poses “an enormous risk” to countries involved and could threaten financial stability, France’ central governor has warned.
In latest attack on European Commission plan for a “Robin Hood” tax across 11 eurozone countries, aimed at raising €35bn, Christian Noyer said: “ commission’ draft is a non-starter and needs to be entirely revised.”
Successive French governments have been among those pushing hardest for a Europe-wide FTT but current socialist administration President François Hollande has also sought in recent months to water down Brussels’ proposals, under pressure financial sector.
do not believe was ever the intention the French government to do something would trigger the destruction entire sections the French financial industry, trigger a massive offshoring of jobs and so damage the economy as a whole,” Mr Noyer told the Financial Times.
He said the commission’s proposals posed “an enormous risk in terms the reduction output in the FTT jurisdiction; increased cost capital for governments and corporates; a significant relocation of trading activities and decreased liquidity in the markets”.
Mr Noyer, a member of the governing council of the European Central , added: “The most important concern for the central banks [is] the risk of the total drying-up of repo markets. means the transmission of monetary would be seriously impaired and the risk in terms of financial stability would not be negligible.”
The eurozone FTT – also known as the Tobin tax after US economist James Tobin – was originally due to take effect next year but has been delayed by wrangling over its details.
Mr Noyer said the focus for the FTT should be on a levy similar to already in place in France, which charges 0.2 per cent on purchases of equities of big companies.
A concern for French banks and the governor is that the planned broad scope of the tax would lead to an exodus of financial sector business Paris, hitting its efforts to compete against London and other centres and ultimately weakening the local lending market.
The French government has indicated that to limit the scope of the eurozone FTT to equities, some bonds and a narrow range of derivatives.
But faces strong pressure within socialist ranks not to give in to pressure banks.
Last month, a top legal adviser to EU finance ministers concluded that they exceeded jurisdiction, infringed EU treaties and discriminated against non-participating states by seeking to cover trades executed in centres such as London, York or Singapore.