Wells Fargo Advantage Funds' latest "Overview, strategy, and outlook" comments, "The European Union (E.U.) is taking steps toward adopting a financial transaction tax (FTT) that could significantly affect U.S. dollar-denominated money markets. Broadly defined to cover all markets, instruments, and actors, the FTT is slated to become effective January 1, 2014, and has several objectives, as detailed by the European Commission. The FTT is intended to reduce the number of different approaches to national taxation; ensure the financial sector makes a fair and substantial contribution to public revenues; and support regulatory measures that encourage the financial sector to engage in more responsible activities -- those the European Commission views as geared toward supporting the real economy. Similar efforts failed at the G-20 and E.U. levels, but now 11 member states—representing two-thirds of E.U. gross domestic product (GDP) -- have indicated that they would approve the common FTT under a process called enhanced cooperation, which requires the approval of nine member states in order to move ahead.... The minimum tax applied to various transactions will be initially set at 0.10% of the amount of the transaction for shares and bonds, units of collective investment funds, money market instruments, repurchase agreements (repos), and securities lending arrangements.... As written, the FTT has significant implications for U.S. investors, including money market funds. While it does not appear that the tax would apply to new issuance, it would apply to secondary market transactions and repos.... The FTT is not a done deal. Member states and working groups may propose changes that would lessen the impact on short-term instruments, and the U.K. legal challenge is a serious threat. We do not dismiss this effort simply because it seems radical or outlandish; those do not seem to be effective criteria for assessing the likelihood of government action."

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