Dear Chancellor,
As trade associations representing both the users and providers of financial services, we are writing to you in order to highlight our serious concerns over the proposed EU Financial Transaction Tax (FTT), to urge you to continue to take a strong stance against the tax, and to encourage the UK to work closely with those EU member states which are also opposed to the proposals.
While the focus of the UK’s opposition has been on the risks of business migration to avoid the FTT, and the subsequent harm this could cause to London as a global financial centre, and hence to the UK economy, we note that the impact study undertaken by the Commission highlights some broader economic concerns applicable to any participating country. The Commission expects only a modest adverse impact on GDP, yet if the assumptions underpinning this calculation are incorrect – and past experience with similar taxes suggests that at least some of them may be – then the impact assessment itself acknowledges that reduction in GDP could be multiples higher. The Commission’s own Impact Assessment acknowledges that it does not take into full account the potential impact on the European economy and on Member States’ wider tax take, where there seems likely to be a disproportionate effect on EU financial centres.
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