Trésorier/Treasurer magazine - N°83 — Oct/Nov/Dec 2013 - (Page 5)

EDITORIAL F.T.T or Robin Hood Tax ? The principle of the tax is not unacceptable or intolerable in itself, provided the real target of the tax is acknowledged, and provided the tax itself is kept to a minimum. A minimal tax would not harm trading in hedging products by corporations who needed to hedge. It would, however, cut down the volume of pure and simple speculative trading. Everyone will fight to defend their own exemption by pleading their own specific circumstances, like pension funds, money market funds, mutual funds or corporates. A tax that is to be only partially applied makes no real sense and would be unfair. Unfortunately, some countries need to rebuild their public finances and are not going to budge. This is a matter of principle that will create competitive advantages for those who do not apply it and will change the market substantially. We cannot rule out treasury management centres relocating to sunnier climes. It looks as if we should call it the «Tobin Tax» (the name of its inventor, even though his country of origin will not apply it) rather than the «Robin Hood Tax». Watch this space. François Masquelier, Chairman of ATEL LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE — N°83 — OCT There will be nothing fair about it. It will be applied in only eleven countries, but will affect many more. It will hit both parties to the transaction, and will not affect only the banks. It will end up punishing companies that need to use financial products for hedging risk. May even end up being counter-productive and have the unintended result of discouraging treasurers from hedging so as to keep down their costs. It is in fact a huge illusion and scam that will hit those who need to hedge harder than those who sell hedging products. Trying to limit or eliminate speculation in financial instruments is probably a mistake because it would reduce market liquidity. Often volume does not come from the «real economy» but from massive speculation, including day trading or high-frequency trading. / NOV / DEC 2013 When people were talking about a financial transactions tax – “FTT” – they also nicknamed it the “Robin Hood tax”. This English folk hero, so often portrayed by Hollywood studios, was used as an image illustrating the European campaign to make the financial sector pay up, by taxing its normal everyday activities. On the face of it this certainly seems a good and praiseworthy idea. Unfortunately, both parties to the transaction (for example inter-companies transactions, and head office/central treasury and subsidiaries’ transactions) will be made to pay this tax, so it will have a cumulative effect generated by the various parties behind each market deal. The end result will be that non-financial corporations will pay for the banks as well. Furthermore, the banks will pass on this tax, in part or in whole, in the price of the transaction. So should we still be talking about a «Robin Hood tax», where what is taken from the rich is handed out to the poor, to the victims of the financial crisis? Of course not. We should rather compare the tax authorities of the eleven countries involved to the Sheriff of Nottingham, eager to get his hands on new sources of money. And is this new tax as high-minded as is claimed? Not at all, in our view. The tax is more about plugging holes in budgets, disguised and spun as a tax to prevent speculation, to sneak it through more easily and make financial companies (banks and non-financial corporations) swallow it. 5

Table des matières de la publication Trésorier/Treasurer magazine - N°83 — Oct/Nov/Dec 2013

Couverture
SOMMAIRE
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW David White - TriOptima
FOCUS
FORUM
CORPORATE FINANCE
15 MINUTES WITH Capita Asset Services - Luxembourg
NEWS
THE FINANCIAL RISK OBSERVATORY

Trésorier/Treasurer magazine - N°83 — Oct/Nov/Dec 2013