A UK funds industry association has reacted harshly to an agreement by ten eurozone countries to bring in a limited version of the financial transaction tax (FTT) in 2016.
“No matter how it is dressed up, an FTT is a tax on savers and investors - not a tax on financial companies,” Jorge Morley-Smith, director of tax at the Investment Management Association. “It is harmful for the prospects of long-term savings, investment, and growth in the EU.”
The association, which represents asset managers with a combined £4.5 trillion (€5.5 trillion) under management, urged EU member states to resist the tax and push for more transparency in negotiations.
The group of ten eurozone countries announced their FTT agreement at a meeting of European finance ministers in Brussels. The bloc, which includes France, Germany, Italy and Spain will seek to bring in a tax on equities and some derivatives by January 1, 2016, at the latest.
The European Commission states that member states and their citizens want the financial sector to make a fair and substantial contribution to public finances, and that the sector should pay back at least a part of what tax payers have pre-financed when banks were rescued during the financial crisis.
The UK and Sweden attacked the plans, with UK chancellor George Osborne particularly strident in his criticism. Osborne says he fears the FTT will have “extra-territorial impact” beyond the ten countries that have agreed to implement it.
Ministers who were part of the bloc say they have only confirmed a minimum political agreement and there is still much work to do.
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