Luxembourg association warns of 'nightmare' individual FTT proposals
The Association of the Luxembourg Fund Industry (ALFI) has cautioned against the “nightmare” stemming from numerous different financial transaction taxes (FTTs) if negotiations among EU member states were to break down.
Camille Thommes, director general at the industry association, said it remained opposed to the introduction of an FTT, which is currently backed by 11 member states seeking to draw up a joint proposal for the tax.
Asked about the risk of the enhanced cooperation procedure breaking down and individual member states introducing their own tax, he said it would be “a nightmare if we had to deal with [numerous] different collection mechanisms”.
Negotiations between backers at the fringes of the Economic and Financial Affairs Council (ECOFIN) of finance ministers stalled last year over disagreements on how wide the levy’s base would be and how it should be collected.
Supporters include France, Austria and Italy, but not the ALFI’s native Luxembourg.
Thommes told journalists in London: “In principle, we continue to be firmly opposed to the introduction of an FTT. We’ve said this on many occasions.
“Our government, like many others, continues to be firmly opposed to this, so we’ll see how the discussions turn out at the ECOFIN.”
He cited a new proposal backed by the Austrian and French governments to broaden the tax base, but was uncertain whether the involved member states would be able to meet the initial date of 2016 for its introduction.
The letter by Austrian and French government ministers reportedly called for an FTT with “the widest possible base and low rates”.
“There are still a lot of issues to be resolved and discussed, notably how do you collect the taxes,” Thommes said.
He said he was “fully convinced” the FTT would end up being an additional tax on investors, leaving those affected at a competitive disadvantage compared with those based outside the FTT zone.
“It would be an easy stance for us to [take] that we are out of this, and we can benefit from this,” he said.
“But we, on principle, say the tax, as it stands, is fundamentally bad, as it hurts the underlying investors.”
The UK government has challenged the use of enhanced cooperation to introduce the FTT but lost the case brought before the European Court of Justice.