A proposed financial EU transaction tax would damage the region’s economies, says ICAP, one of the world’s largest inter-bank brokers.
Reuters reports that the new rules would raise funding costs for governments and companies, and would necessitate financial activity to move outside of the tax zone and increase systemic risk.
Michael Spencer, ICAP’s chief executive officer said in a statement to Reuters
The proposed FTT is a misguided policy which would be severely detrimental to both EU economies and businesses…It would severely damage the functioning of debt markets which are essential for governments and companies to raise finance. It would increase both their borrowing and operational costs and lead to a flood of financial activity being moved outside the FTT zone.
Citing an estimate from Bank of America, ICAP noted that the tax has the potential to increase annual interest cost in the first year as much as 8.5 billion euros, or $11 billion, for countries including Germany, Italy and France. The United Kingdom, which does not plan to adopt the plan will be among the biggest generators of revenue, and will not benefit from the tax — according to the ICAP.
Previously, eleven countries agreed to the tax, including Austria, Belgium, Estonia, France, Germany, Greece, Portugal, Spain, Italy, Slovakia, and Slovenia.