The UK Chancellor has written to the Chief Executive of the EBF regarding concerns expressed in a letter dated 21 May on the proposed FTT, which he described as "poorly-designed", "badly-timed" and "unlawfully extraterritorial".
Osborne observed that the absence of any exemption for market making "is a key feature of other financial transaction taxes", including UK Stamp Duty and transactions taxes in France and Italy, and that it mitigates the "cascade effect", in which every element of a trade is taxed and which Osborne stated would hit pensioners and savers.
He added that the tax would hinder growth in the EU by disrupting the diverse markets used by corporates to raise finance for long-term investments and to hedge risks; undermine the single market by creating two regimes for derivatives and distorting competition; and conflict with G20 regulations relating to collateral and bank funding instruments.
Again referring to UK Stamp Duty, Osborne described the tax as "narrow" and "modest," and as having a "proper geographical link" in that only UK companies were taxed. However, he explained that he had in March announced plans to remove the tax in relation to companies quoted on growth markets, and to reduce the applicability of the tax on investment funds.
Osborne's letter to Ravoet was a reply to a letter which the EBF and other banking organisations sent to European finance ministers via ECOFIN. The EBF believes that the FTT put financial service operators within the FTT zone under "extremely high pressure".
Full letter
Original letter, 21.5.13
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