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Italy seen reaping 1 bln euro from transactions tax-body

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MILAN, Oct 11 (Reuters) - Italy's government could raise 1billion euros a year from a tax on financial transactions butthe levy risks hurting small investors more than speculators,the head of an Italian brokers' association said.

Italy and 10 other euro zone countries agreed this week topress ahead with the levy, which according to a EuropeanCommission proposal is set to be 0.1 percent on the trading ofbonds and shares and 0.01 percent for derivatives deals.

The European Commission has said the tax could raise up to57 billion euros ($74 billion) a year if applied across all 27EU countries from 2014.

Details on how the tax would work are still sketchy and itmay take two years before the necessary legislation is in place.

The initiative has been pushed hard by Germany and Francebut strongly opposed by Britain, Sweden and others. Critics sayit could distort the EU's single market by giving financialcompanies incentives to shift business to European centres wherethe tax is not levied - or away from Europe altogether.

The head of Assosim, an association of 80 Italian financialinstitutions, said on Thursday that based on a similar levyalready in force in France, annual revenues from the so-called"Tobin Tax" would likely be no more than around 1 billion eurosin Italy.

"It would only raise a modest amount here and it would hurtsmall savers and pension funds most, not banks or hedge funds,"Gianluigi Gugliotta, secretary general of Assosim, told Reuters.

"Brokers will simply pass on the tax to their customers,which in Italy are mostly retail investors."

Gugliotta said that if the aim of EU authorities was todiscourage high-frequency trading, which involves placing andthen pulling multiple orders faster than the blink of an eye,the tax risked being ineffective.

"If the tax is applied on the trading balance at the end ofeach day, then speculators who place a lot of orders but onlyexecute a fraction of them would mostly avoid paying," he said.

He said the association was instead proposing a tax onorders which are cancelled if they surpass a certain rate.

(Reporting by Silvia Aloisi; editing by Andrew Roche)

((silvia.aloisi@thomsonreuters.com)(+39 02 6612 9723))

Keywords: ITALY TAX/