Praesentation Denys by fanzhongqing

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									   Ecosocial Forum Europe
                Conference

A New Basis to Finance International Duties
               VIENNA JUNE 2006




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       Currency
    Transactions Tax

     Implementation
technical and legal aspects


        prof. Mr. L.A. Denys

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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 (cont’d)
 • 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 (cont’d)
 • 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 (cont’d)
 • 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 (cont’d)
 • 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)                                                                        9
            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)
                                                                        10
           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 MNO’s
    -   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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   Currency
Transactions Tax




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