Condemnation has been heaped on EC plans to levy 20% withholding tax on income from bank accounts and international securities held by EU residents. The International Securities Market Association (ISMA) has called the proposal 'fundamentally misconceived', arguing that substantial losses will be incurred by bondholders, as issuers recall Eurobonds with special 'gross-up'tax clauses.

Distortions in financial markets and heavy administrative costs will also affect savers, ISMA says, whilst criticising a lack of consultation with the securities market for a scheme it believes will raise little in revenue for EU governments.