Efama warns of multiple layers of taxation

Russin-dollsThe proposed financial transaction tax on the funds sector of long terms savings would increase multiple taxation, the European Fund and Asset Management Association (Efama) warns.

In September the European Commission proposed a financial transaction tax "to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the member states".

Efama says impact of the tax on the funds market would be “significant” because the headline rate is relatively high and it could result in multiple layers of taxation.

Investment funds, for example, would be charged on a fund level for transactions within the portfolio and on an investor level for transactions in fund shares.

Further down the distribution chain, using financial intermediaries that distribute fund shares or units, would introduce another layer of taxation for single investors.

Germany and France have been among countries pushing for the tax on all financial investment systems, a move to show their taxpayers they are serious about compensating for some of the costs of the debt crisis.

The commission highlights that the financial sector played a role in the origins of the economic crisis and should therefore make a contribution.

“Governments and European citizens at large have borne the cost of massive taxpayer-funded bailouts to support the financial sector,” a statement says. “Furthermore, the sector is currently under-taxed by comparison to other sectors.”

Efama, however, says these claims are “misleading”.

If implemented in its current form, the tax would take effect in 2014 and could raise about €57 billion euros every year.

©2011 funds europe