FRENCH LOBBY AGAINST A FRENCH-ONLY TRADING TAX

The Association Paris Europlace which represents key players in the French financial world speaks strongly against a French-only trading tax. The move comes after President Sarkozy said France should not wait for other European countries to get on board. The Association argues that such a tax would hurt the country's economy unless it was implemented across the European Union. According to Europlace,if this tax was applied only in France, it would inevitably lead to an exodus of banks, insurance companies and asset management firms to other world financial locations; it would reduce French independence and the management of the financial conditions of its economy; it would reduce the role of Paris in the European and global economy and create job losses. The Association points out further that far from touching only the transactions considered speculative, such a tax would also affect the other transactions carried out by private investors, companies and institutional investors. It goes on to say that implementing such a tax would represent a very heavy burden on French banks, asset management firms and insurance companies on the top of the high cost already imposed by the new financial regulations put in place under Basel 3, Solvency 2. Therefore, Paris Europlace sustains that it would be all the financial establishments in France and their private clients and enterprises that would suffer if such a tax was introduced.

Membership of Europlace today includes more than 150 different entities that operate in the financial field including issuers as well as banks, brokerage houses, asset management firms, professional associations, consulting firms, law firms and accounting firms.

Board members of Europlace include such distinguished entities as GDG Suez, Groupe LVMH, PPR, AXA, NYSE Euronext, Compagnie de Saint Gobain, Crédit Agricole SA, Lafarge, KPMG, HSBC France, Total, Autorité des Marchés Financiers (AMF), Vivendi, Banque de France, Fédération Bancaire Française (FBF), Société Générale, BNP Paribas, BPCE, Association Française de la Gestion Financière (AFG), France Télécom, Lazard Frères, Michelin, Caisse des Dépôts et Consignations, Eurazeo, JP Morgan France, Wendel Investissement, Chambre de Commerce et d'Industrie de Paris (CCIP), Air France-KLM, Fédération Française des Sociétés d'Assurances (FFSA), Association Française des Marchés Financiers (AMAFI), The Royal Bank of Scotland in France.

The EU's executive European Commission formally adopted plans in September 2011 for a financial transaction tax, but it will need unanimous approval from EU states. Under the plan, stock and bond trades would be taxed at the rate of 0.1 percent, with derivatives taxed at 0.01 percent. The Commission said the tax would be imposed on all financial transactions in financial instruments between financial firms when at least one party to the trade is based in the bloc.

However, the prospects of the tax being applied across the European Union appears unlikely in the short term because Britain has said that it will only support a tax which is applied globally, while banks call it a nonsense.

Germany will push for a financial transaction tax to be introduced at EU-level, or at least in the euro zone but if hurdles proves to be too high, then Germany and France would seek to apply the tax.