A UK MEP is set to press for exemptions to mitigate the effect of any planned European transaction tax on investors.
In September, the European Commission proposed a tax of 0.1 per cent on buying and selling bonds and shares and 0.01 per cent on buying and selling derivatives. It has been criticised by the UK Government and industry experts as they believe the tax would hit ordinary savers and investors.
Speaking to Money Marketing, the European parliament’s economic and monetary affairs committee chair Sharon Bowles says she is extremely concerned about the impact on investors and is considering proposing exemptions for some transactions.
LibDem MEP Bowles (pictured) says: “I have been toying with the idea of the tax being restricted to banking activities rather than those affecting the real economy. Applying it to proprietary trading would target something seen as perhaps causing a problem but would avoid hitting pension funds.”
Any recommendations made by the European parliament must be considered by the European Council while finalising details of the tax but they are not binding.
Conservative MP and co-chair of the all-party parliamentary group for European reform Andrea Leadsom dismisses any such exemption as a non-starter. She says: “It is a ridiculous idea, a totally unrealistic bureaucratic nightmare and a licence to create work-rounds.”
Bowles has little confidence in the European Commission’s estimate that the tax would raise £50bn a year. She says: “Because of the late change from a tax on institutions to a transaction tax, they had to cobble all this together at the last minute, so what they put out does not stack up.”
Anand Associates managing director Bhupinder Anand says: “More complexity through exemptions is a typical bureaucrat’s solution. However, there are already enough charges, the sector does not need any more and the risk is that once the tax is in, it is very easy to increase it.”