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Belgian pension funds have urged the Government to withdraw from the proposed European Union financial transaction tax (FTT), warning that the tax could "devastate" the industry.
In a strongly worded statement issued on November 25, PensioPlus, the Belgian pension funds association, said that Belgium would lose its status a major jurisdiction for pension funds if the country choses to participate in the FTT while neighbors and competitors Luxembourg and the Netherlands will not.
According to PensioPlus, the tax would add considerably to pension funds' costs, with Belgian firms expected to pay around EUR20m (USD21.25m) annually as a direct result of the FTT. However, it predicted that indirect costs would be three to four times higher.
What's more, pension fund contributors would also lose out with scheme members likely to see the equivalent of five to 24 months in pensions contributions lost as a result of the FTT, the association claimed.
Under the proposed FTT directive drafted by the Commission in 2011, the tax would be imposed on all transactions in financial instruments, with the exchange of shares and bonds taxed at a rate of 0.1 percent and derivative contracts at a rate of 0.01 percent.
However, the participating member states have found it very difficult to arrive at a consensus on the technical details of the new directive. The 11 member states that originally committed to the FTT under the enhanced cooperation legislative mechanism, which requires support from a minimum of nine member states, was reduced to 10 last year when Estonia decided to pull out of the talks.
Belgium also recently expressed doubts about certain aspects of the proposals, while the ongoing participation of Slovakia and Slovenia is in doubt.
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