Brussels, 22/01/2015 (Agence Europe) - The European banking industry is up in arms against the planned financial transactions tax (FTT), which eleven member states wish to bring in by 2016 in the framework of enhanced cooperation, but which is not without its problems (see other article).
The European Banking Federation (EBF), the European Association of Co-Operative Banks (EACB), the European Association of Public Banks (EAPB) and the European Savings Banks Group (ESBG) have described the negative impact on their activities of an FTT, in a letter to the finance ministers of the eleven countries in question and of which EUROPE has had sight.
“Introducing an FTT based on a limited territorial scope will put an extremely high pressure on the participating member states' financial service operators and will significantly increase their governments' dependence on financial markets outside the FTT zone and outside Europe”, state the four interest groups, warning that “small domestic financial institutions might be hit disproportionately hard”.
According to the banking industry, the FTT as planned would bring with it many disadvantages: - the tax will reduce volumes of financial transactions and will have a negative impact on liquidity on the secondary market; - its cascading effect at each stage of a transaction will increase businesses' operating costs; - financial players located outside of jurisdictions subject to the FTT will be deterred from doing business with financial institutions covered by the tax; - the collection of the tax remains a major challenge. (MB)