Print Page
News & Press: International News

Austria May Face Budget Gap Due To Faltering FTT

Wednesday, 05 June 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
Share |

Author: Ulrika Lomas

Given mounting opposition in Germany, and in view of the uncertainty that the European financial transactions tax (FTT) will enter into force as planned on January 1, 2014, Austrian coalition parties have warned that new tax measures may have to be taken, to plug a possible budget gap next year.

Adopted back in February, the European Commission's FTT proposal provides for a 0.1 percent tax to be imposed on share and bond transactions and for a 0.01 percent tax to be levied on derivative transactions. The tax is expected to generate annual revenues of between EUR30bn (USD39bn) and EUR35bn. The Austrian Government is expecting annual revenues from the tax of around EUR500m from 2014.

Amid warnings of delays and suggestions that FTT plans will have to be scaled back, Austria’s Social Democrat (SPÖ) financial spokesman Kai Jan Krainer made clear that the country’s banks, and not the masses, should be compelled to compensate for any revenue shortfall, given the financial industry’s unrelenting efforts to block the EU FTT. Krainer therefore ruled out the idea of a possible value-added tax rise.

While underscoring that this is a "very difficult process," and that the devil lies in the detail, financial spokesman for the Austrian People’s Party (ÖVP) Günther Stummvoll conceded that fiscal re-adjustments might be necessary if, "contrary to expectation," the financial transactions tax is delayed.

Despite its continued commitment to the introduction of a comprehensive EU FTT, the German Government has recently underlined the importance of taking objections from the banking industry very seriously, to ensure that the tax does not lead to additional problems in the European banking sector.

Back in April, Bundesbank president Jens Weidmann warned of the negative implications of the planned EU FTT on monetary policy, stating that the short-term refinancing operations of banks will be affected.

At the time, Weidmann stressed that although the introduction of the levy has been fundamentally agreed, the unintentional side effects of the tax might be considerable. Weidmann alluded to the fact that in its current form the tax would include money market or so-called "repo" transactions, significantly impacting on the repo market, which plays a central role in liquidity balance between commercial banks.

Official sources have also suggested that the so-called EU11 group of European nations is considering a climb-down over controversial proposals for a financial transactions tax.

According to Reuters, which claims to have spoken to Brussels officials linked with the project, the levy on trading bonds and shares could fall from the originally outlined 0.1 percent to just 0.01 percent. The result would be a drop in the revenue generated from EUR35bn to just EUR3.5bn.

A spokeswoman for EU Tax Commissioner Algirdas Šemeta commented: "Depending on the speed of progress from here, it is still feasible that the common FTT could be implemented in 2014, although January 2014 is looking less likely.".














Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

  • Tax Practitioner Registration Requirements & FAQ's
  • Rate Our Service

    Membership Management Software Powered by YourMembership  ::  Legal