Arab Today, arab today bankers criticise francogerman proposal
Last Updated : GMT 19:46:07
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Bankers criticise Franco-German proposal

Arab Today, arab today

Arab Today, arab today Bankers criticise Franco-German proposal

Frankfurt - Arabstoday

Banks criticised Franco-German plans for a tax on financial transactions, saying they will jeopardise economic growth and distort markets, as the British, Dutch and Swedish governments distanced themselves from the proposals. \"The financial-services industry should not be seen as an additional source of tax revenue but as an essential part of a stable and sustainable economy,\" said the Association for Financial Markets in Europe, which represents firms including Deutsche Bank AG and BNP Paribas SA. A \"tax would be a brake on economic growth,\" it said in a statement. Lenders would pass on the cost of the levy to customers in the same way they already transfer the cost of UK Stamp Duty on share purchases to clients, Brian Mairs, a spokesman for the British Bankers\' Association, a London-based lobby, said yesterday. A tax would only work if implemented globally or it would trigger \"distortions\" in financial markets, Mairs said. The British government, which oversees Europe\'s biggest financial centre, is preparing to clash with its French and German counterparts over the levy, which would be applied in all 27 European Union countries. Finance chiefs failed to agree on a transactions tax in September 2010, amid opposition from nations including the UK. The Swedish and Dutch governments also said yesterday that they oppose the plans. EU taxation proposals require unanimous support from the bloc\'s 27 governments to become law. Article continues below Josef Ackermann, chief executive officer of Frankfurt-based Deutsche Bank, Germany\'s biggest lender, said the tax would crimp banking profits in the European Union and may push business out of the Eurozone. \"A lot of activities will move out,\" Ackermann said yesterday in an interview with CNBC. \"In the end, beneficiaries will be in other parts of the world, especially emerging markets, perhaps the US or the EU, and those who will pay a price for it will primarily be Frankfurt and Paris, exactly those leaders who are proposing it.\" Implementing a tax on financial transactions would be difficult, Mike Trippitt, an analyst at Oriel Securities., wrote in a note to clients. \"Without the practical detail on scope and implementation, this should be treated as political rhetoric for now,\" he wrote. \"Implementation is knotty.\" A tax would need to be applied at the Group of 20 level to be effective, the UK and Netherlands said yesterday. Introduced globally \"Any financial transaction tax would have to apply globally — otherwise the transactions covered would simply relocate to countries not applying the tax,\" the UK Treasury said in a statement. \"The Dutch government has always pointed out that such a tax could be introduced globally,\" Dutch Finance Minister Jan Kees de Jager said in response to questions in parliament in The Hague Wednesday. \"If you don\'t do that, the distortion will be big. People can easily shift transactions to another jurisdiction.\" Sweden\'s Financial Markets Minister Peter Norman said that imposing the tax is unlikely to help EU efforts to calm market turmoil and would need to be global to have any effect. \"I find it difficult to see how a transaction tax in the EU would have any positive effects,\" Norman said in an interview in Stockholm. A tax at EU level could generate ¤200 billion (Dh1.06 trillion), according to economists at Royal Bank of Scotland Group. The levy may also \"raise questions\" about whether Barclays, Standard Chartered and HSBC Holdings, three of Britain\'s biggest banks, will retain their headquarters in London, Oriel said. The European Commission said it will draw up proposals for the tax and an assessment of its potential economic impact, before G-20 leaders meet in Cannes, France in November, backing recent calls by French President Nicolas Sarkozy and German Chancellor Angela Merkel for the levy. Excessive risk-taking \"The commission will go ahead with a legislative proposal for the FTT in autumn,\" Cristina Arigho, a spokeswoman for the EU\'s executive body in Brussels, said in a statement. A financial transactions tax, or FTT, \"could be an appropriate tool to reduce excessive risk-taking.\" In a bid to stem the worst financial crisis in Europe since the creation of the single currency, Merkel and Sarkozy agreed to press for closer Eurozone cooperation, tougher deficit rules and a harmonisation of their corporate tax rates. Sarkozy said finance ministers would be charged with developing a transactions tax, which he called a \"priority,\" sending European financial stocks lower yesterday. Deutsche Boerse, the operator of the Frankfurt exchange, led the Bloomberg Europe Banks and Financial Services Index 1.1 per cent lower in London. The tax could be used to finance the EU\'s next multi-annual budget, Jose Barroso, the commission\'s president, said in June. It is sometimes called a Tobin tax after James Tobin, the Nobel Prize-winning economist who first suggested the idea in 1971. The levy would be a \"tax on the City of London which Brussels wants to fund its ever-increasing spending,\" Martin Callanan, the leader of UK Conservative members of the European Parliament, said. \"London cannot and must not pay for the errors of other countries that have failed to make their financial-services sectors competitive and now want to drag us down with them.\"

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