BDO warning that transaction tax could be forced on all states
BDO has warned that the European Commission could force the financial transaction tax on all member states, including the UK, by changing it from a tax to a charge.
BDO partner and head of financial services Tim Kirk says member states would not be able to veto the FTT if it is positioned as a charge. He says: “The FTT could be driven through for all 27 member states as a transaction charge so it is not a tax and not subject to a veto. The Commission finds ways to get the things it wants.”
The UK has refused to back the tax, which was proposed by the EC in September. It would see a 0.1 per cent tax on stock and bond trading and 0.01 per cent on derivatives contracts. The tax would come into effect in 2014 and the EU predicts it would raise £50bn a year.
Chancellor George Osborne says the tax would hit individual savers rather than the banks.
The IMA says the UK is now in a weaker position to influence policy around the FTT after Prime Minister David Cameron rejected a new European treaty designed to deliver greater fiscal discipline across member states.
Chief executive Richard Saunders says: “It is difficult to argue that we are in a better place on financial regulation this week than we were last week. It is business as usual on negotiating directives but there is no question that the UK is in a less strong position than it was before in terms of cutting political deals.
“We will have to work hard to ensure the UK industry’s voice is heard in Brussels.”