AS 2011: EU financial transaction tax rejected

Chancellor George Osborne has warned that a financial transaction tax would hit individual savers rather than the banks.

In his autumn statement speech, Osborne said rejecting the tax is important to ensure the UK remains at the centre of the world’s financial system.

He said: “That is why we will not agree to the introduction of an EU financial transaction tax. It is not a tax on bankers, it is a tax on people’s pensions.”

In September, the European Commission proposed imposing a tax of 0.1 per cent on the buying and selling of bonds and shares and a tax of 0.01 per cent on the buying and selling of derivatives.

Critics have said companies will relocate to avoid the FTT and that pension savers or other mutual fund investors would bear the brunt of the tax.

Investment Management Association head of tax Jorge Morley-Smith, says: “We are glad the Chancellor has recognised the FTT will not affect the financial institutions that contributed to the crisis but will reduce the savings of ordinary taxpayers.”