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Franco-German Businesses Warn Against EU FTT

by Ulrika Lomas,, Brussels

30 April 2014

French and German business representatives, and financial markets organization, Paris Europlace, have newly reaffirmed their grave concerns about the European Union Financial Transactions Tax (EU FTT).

In a joint communiqué, Medef, BDI, and Paris Europlace warned that the EU FTT, currently being discussed by 11 EU member states within the framework of enhanced cooperation, will have a negative impact on the European economy, at a moment when economic recovery in the Eurozone remains fragile.

They said: "The current EU FTT project would severely hurt non-financial corporations by worsening their financing terms and this precisely at a time where bank loans are constrained by Basel III rules as well as European banking regulations."

"In particular, there is a specific risk if the derivative contracts useful to the economy (e.g. equity, foreign exchange, interest rates, commodity or credit derivatives) are included in the EU FTT. These contracts are largely used by non-financial corporations to cover their risks. Increasing their costs will be detrimental to the corporations' competitiveness."

"Taxing those derivative contracts will also produce a massive relocation of these activities in financial entities outside of the enhanced cooperation," they argued.

They summarized: "After explicit warnings from the European Central Bank, European Investment Bank, Bundesbank, Banque de France, and from a whole range of professional organizations on expected negative consequences, the introduction of a new and complex European tax on the productive sector and on financial intermediaries in 11 states would be a very bad signal for the business community of the concerned member states, as well as for the competitiveness of the Eurozone."

TAGS: tax | business | interest | banking | tobin tax | France | Germany | regulation | European Union (EU) | Investment | Europe | Invest | Investment | Tax

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