According to the Association of German Banks (AGB), the decision to introduce a European financial transactions tax is a mistake. “A tax of this kind will damage the European financial industry and, in the final analysis, even threaten economic growth,” said Michael Kemmer, general manager of the AGB. Kemmer added that it was with good reason that the International Monetary Fund (IMF) and national central banks had always rejected the idea of such a tax.
“Neither at international nor EU level is there a sustainable consensus on a financial transactions tax. In Europe, the UK in particular, which is home to Europe’s biggest financial centre, has come out firmly against the tax. According to the European Commission’s [EC] current plans, avoidance of the tax to the detriment of the affected financial markets would be countered by a very broadly defined ‘principle of location’. There are considerable doubts, from both a legal and a practical perspective, whether an approach of this kind can succeed in preventing avoidance action at the expense of countries subject to the tax,” he said.
“This calls the expected increase in revenues into question. The consequences of the financial transactions tax are therefore clear. Market participants will relocate outside Europe or, if this is not possible, their international competitiveness will be irreparably damaged.”
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