The House of Lords EU Sub-Committee on Economic and Financial Affairs and International Trade is currently conducting an inquiry into what the impact of an FTT would be, and while this is on-going the Committee want to draw their concerns to the attention of the Financial Secretary at an early stage while negotiations on the FTT progress
London’s position as Europe’s largest financial centre means that the Commission’s proposal for an FTT has profound implications for the UK. The Committee remain to be convinced about the need for a financial transaction tax and are specifically concerned that:
- An FTT would risk businesses relocating outside the UK;
- The FTT is likely to induce a loss in GDP between five and 20 times larger than the revenues raised from the tax;
- The Commission’s proposal will result in revenues being transferred from the UK to other EU governments on the basis that most of the EU’s wholesale financial transactions take place in London;
- Should the UK veto an EU-wide proposal, other Member States may still introduce an FTT, with detrimental consequences for the UK
The Committee will continue taking evidence on the proposal in January.