MM Leader: Savers will suffer from this "Robin Hood" tax
As European politicians, trade unions and charities continue their push for a European financial transaction tax, it is worth remembering that ordinary savers will bear the brunt of this new levy.
Announcing its proposed tax in September, the European Commission suggested individuals and businesses would not be hit by proposals aimed squarely at the financial institutions which helped cause the economic woes spreading across Europe.
However, ordinary investors are likely to be the ones who will principally suffer as a result of the so-called Robin Hood tax through new charges on their pensions and investments.
The planned FTT would hit savers in pension and investment funds multiple times as it would apply on the creation and cancellation of units in collective investment vehicles. As investors are the ones who own the funds, there is no one else to pay the levy.
The Investment Management Association estimates that the majority of FTT costs incurred earlier in the acquisition chain will be passed on to the end-investor either through an adjustment to spread levels or brokerage fees.
Much of the critique of the FTT has focused on the folly of introducing such a tax without a global agreement, with both the Conservatives and Labour more amenable to plans if agreed on a global basis.
But political arguments should be focused on the fact it is a poorly targeted in the first place. A tax on saving will hit ordinary investors who are already suffering the fallout of the financial crisis, rather than the boardrooms of the big banks.
In romantically evoking the scourge of the Sheriff of Nottingham, proponents of this new savings tax have got their symbolism all wrong.
In folk lore, Robin Hood stole from the rich and gave to the poor. His band of merrymen did not roam Sherwood Forest looking to take from individuals and families who were frugally saving for their futures under the direction of foreign powers looking for an easy target to sort out the mess they created.
Well done to the Institute of Financial Planning team and all advisers helping to make this year’s Financial Planning Week a success. They are proving it is possible to get positive industry stories into the consumer press.