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AS 2011: Osborne brands FTT a tax on pensions

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Chancellor George Osborne has defended the decision to reject the European Commission’s proposal for a financial transaction tax saying it would be a tax on individual savers not banks.

In today’s autumn statement, Osborne said the tax must be rejected to ensure the UK remains at the centre of the world financial system.

He said: “It is this Government’s policy to ensure we remain the home of global banks and that London is the world’s pre-eminent financial centre. 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.

The proposal has been criticised for the potential to drive some businesses away from the UK and the EU to avoid the tax, as well as for the fact it will hit pension savers and other investors.

National Association of Pension Funds chief executive Joanne Segars says: ““The Government is right to push back against these plans. This tax would have picked on savers, not bankers. It would have hiked costs for many employers struggling with a weak economy while trying to provide a good pension.”

Instead of a financial transaction tax, Osborne says the bank levy, which will be increased from 0.078 per cent to 0.088 per cent in January, ensures that banks pay their share.

Click here for all the news on today’s autumn statement.

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