The Hollande government is doubling the levy to 0.2 per cent from the 0.1 per cent tax initially advocated by former President Nicolas Sarkozy, according to a copy of the text. Many institutional investors may escape the tax using so-called contracts for difference, or CFDs, offered by prime brokers that let them bet on a stock’s gain or loss with owning the shares.
The transaction tax, aimed at curbing market speculation, will be paid on the purchase of 109 French stocks with market values of more than €1 billion ($1.2 billion), including Pernod Ricard SA and Vivendi SA (VIV).
The UK, home to Europe’s biggest financial centre, has a stamp duty while opposing a transaction tax. German Chancellor Angela Merkel said on June 22 that she and the leaders of France, Italy and Spain agree on the need for such a levy. The other countries have yet to put one in place. Investors buying UK shares pay a stamp duty of 0.5 per cent on their purchase.
“The stamp duty has deformed the market in the UK with people buying more derivatives instead of stocks”, said Pierre- Yves Gauthier, head of strategy at Alphavalue SAS in Paris. “The example coming from the UK shows us that this sort of tax makes the market more dangerous.”
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