Newspaper article International Herald Tribune

E.U. Rejects Critics of 'Robin Hood' Tax

Newspaper article International Herald Tribune

E.U. Rejects Critics of 'Robin Hood' Tax

Article excerpt

Algirdas Semeta, the European commissioner drafting the rules, said the levy on financial transactions was "fully compliant with international tax law."

E.U. regulators on Thursday defended plans to create the first international tax on financial transactions after business groups in the United States warned that the levy could break international agreements.

The plan, also known as a Robin Hood tax, aims to redistribute money generated by the finance industry, and could raise up to EUR 35 billion, or $47 billion, a year for 11 participating countries, which include Germany and France.

The European authorities have promoted the rules as a way of penalizing the financial sector and returning some of the money that was spent on bank bailouts to citizens squeezed by austerity and the economic slowdown.

But the law is raising concerns in the United States, and in European countries like Britain and Luxembourg that are not participating, because the rules could increase the cost of transactions that involve institutions inside the taxed zone.

This week, the U.S. Chamber of Commerce and four powerful financial services associations warned Algirdas Semeta, the European commissioner drafting the rules, that he was proposing "novel and unilateral theories of tax jurisdiction" that were "both unprecedented and inconsistent with existing norms of international tax law and long-standing treaty commitments."

In a letter to Mr. Semeta, the groups said "many transactions occurring within the United States that have no direct connection to Europe" would be subject to the tax.

A spokeswoman for the U.S. Treasury said in an e-mail that officials had raised concerns about the rules with their European counterparts. She said the Treasury did "not support the proposed European financial transaction tax, because it would harm U.S. investors in the United States and elsewhere who have purchased affected securities."

Mr. Semeta said at a news conference on Thursday that the criticism was unfounded and that the rules were "fully compliant with international tax law" and based on principles "widely used in international taxation practice. …

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