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France pushes to break ‘Robin Hood tax’ impasse

France's finance minister has made a new push to revive Europe's financial transaction tax in a bid to break a deadlock among 11 European countries. But analysts doubt it will ever see the light of day.

France pushes to break 'Robin Hood tax' impasse
France and Austria led the charge to break deadlocks on the transaction tax. Photo: Images Money/Flickr
The tax, known as the FTT, has seen finance heads from eleven European countries at loggerheads for the past three years. 
 
Following the global financial crisis, the European Commission had argued in favour of a tax on stocks, bonds and derivatives, claiming that it could raise up to €57 billion a year for the EU if it was implemented across all 28 member states.
 
But discussions over an EU-wide implementation of the measure have stalled as countries are unable to agree on which transactions would be taxed, as well as the level of taxation.
 
On Thursday, the French Finance Minister Michel Sapin and his Austrian counterpart Hans-Joerg Schelling penned a letter attempting to introduce a compromise idea. The two countries suggested that the taxes should be applied at a lower rate than previously proposed, but across a wider range of services. 
 
"The very tax base has gradually been stripped of meaning, particularly in the case of derivatives," they wrote. 
 
"We suggest resuming the work on a different footing to the approach that led to negotiations hitting a wall in 2014. This fresh direction would be based on the assumption that the tax should have the widest possible base and low rates."
 
The move has been strongly opposed by the UK, where officials fear the tax would push business away from London. Sweden is also concerned that the tax may impact local and European business, citing that the Swedes faced economic problems after introducing their own FTT during the 1980s.
 
Both countries – which are not in the eurozone – have also criticized the "secretive" way that countries using the single currency have conducted talks on various FTT proposals.
 
Finance expert Tomasz Michalski, from HEC business school in Paris, told The Local on Friday he doubts the plan will ever win enough support.
 
"I think they are just prancing around. Austria is too small a player and it looks like the French government is just suggesting this to try to win support on the left," Michalski said.
 
"After their recent rise in popularity, perhaps they want to return to some of the promises they made before Hollande was elected in 2012, when he declared the world of finance as his enemy. 
 
"There's not enough support among northern European countries for this. The UK is against it and Germany is reluctant because of the impact on its financial centre in Frankfurt."
 

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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