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Pension fund FTT carve out ‘unlikely’, says MEP

MEPs are unlikely to back proposals for pension fund carve-outs from any financial transaction tax at a vote on Wednesday, according to Conservative MEP Kay Swinburne.

In September the European Commission proposed an FTT which would see a 0.1 per cent charge on stock and bond trading and 0.01 per cent on derivatives contracts. Politicians and lobby groups have warned the tax would hit investors, and particularly pension funds, rather than the financial institutions it is aimed at.

On Wednesday the European Parliament’s economic and monetary affairs committee will vote on a package of amendments to the EC’s proposal which, if ratified later by a vote of all MEPs, will form the parliament’s official position on the FTT in any negotiations over a final text.

Speaking at a Centre for Policy Studies event on the FTT in London this morning, Swinburne, a member of the Econ committee, said the committee is unlikely to back proposals put forward to exempt long-term investors from the tax, despite pressure from the UK.

She said: “The argument in Parliament and particularly from the rapporteur is there should not be any exemptions and that [the FTT] should modify behaviour from short-term to long-term investing. We proposed, if that is that is the case, can we please put in place exemptions and carve outs for pension funds and long-term investors so they do not continue to have to pay every time they re-balance their portfolio. I was told categorically that would not be entertained and that it is unlikely any amendments will get through the committee when we vote on Wednesday.”

If the parliament does not back exemptions it leaves only the European council, made up of EU member state representatives, to propose the change.

The French government has already brought forward unilateral plans for an FTT while Germany has been pushing for wider support from EU member states. Speaking at the event, Roger Liddle, an ex-adviser to European Commission president Jose Manuel Barroso and Tony Blair, said upcoming elections in Europe could make an FTT more likely.

He said: “It has a lot of political traction and the momentum behind it is quite strong on the continent. It will be strengthened if Francois Hollande becomes French president next month and if the German SDLP enter the Government in Berlin, which I think is quite likely, even if Mrs Merkel remains Chancellor.”

He added that those arguing, as Chancellor George Osborne does, that an FTT should only be introduced at a global level do not take into account the “global clout” of the EU. He said if the EU implemented the levy, it would “pressure” other jurisdictions to follow suit.

Also speaking at the event, Treasury select committee chairman Andrew Tyrie said: “This would be a taxation on the transactions between businesses. That is something for which, as far as I am aware, there is no EU competence (to set this) and, even if there were, I would be very wary about extending it.”

Swinburne added: “If we have an EU tax we would have to abolish our stamp duty which raises revenue directly for the Treasury. I am genuinely worried we would be trading one deliberate pot of money we raise in a very transparent fashion to one that is very opaque delivered back to us by a very complicated mechanism.”


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