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The European Union as a Global Actor: The Case of the Financial Transaction Tax

  • Marina Strezhneva (a1)

The EU plays a high-profile role in the international arena, and yet this role still evades accurate conceptualization. Since the EU is not a state, it is commonly accepted as sui generis; a normative power influencing the world order mostly by means of direct and intermediary persuasion. Despite this position, in practice when championing the global normative agenda, the EU does not always demonstrate high efficiency as a leader. This article studies the EU’s efforts to push through regional and global versions of a financial transaction tax, meant to promote the common good through the positive externalities it generates for the economy. The aim of the article is to arrive at an adequate explanation for the (in)ability of the EU to act as an agent of global governance in this case. The focus of attention is the inner organizational limitations on the EU’s behaviour as a global actor.

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8.In particular, in many jurisdictions, no value added tax (VAT) was imposed on financial transactions, distinguishing them from many other services that did have to pay VAT.
9.Unilateral financial transaction taxes were at that time introduced in EU countries, such as Austria, Greece, Luxembourg, Poland, Portugal, Spain and the UK.
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14.It led to financial institutions relocating to surrounding countries. The spectacular failure of the Swedish experience with a ‘unilateral’ FTT is nowadays attributed mainly to its poor design. The tax rates were very high. The taxation mechanism was easy to evade. While government bills and bonds and some associated derivatives were made subject to taxation, substitutes such as debentures, variable-rate notes, forward rate agreements and swaps were not. For the EU, the Commission subsequently advocated lower rates and a very wide scope, with all financial transactions covered, see G. Färm (2014) Forget Sweden, FTT should fly. In: G. Färm, (accessed 20 February 2016).
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European Review
  • ISSN: 1062-7987
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