In a strongly-worded letter, the International Banking Federation (IBF) also said that the “cascade effect” of the proposed levy would hit ordinary citizens and businesses of all sizes and from all sectors.
The letter [see link at foot of page] written by the IBF – which represented high street banks such as Barclays and HSBC as well as leading investment banks – warns that the “naive” new charge could be counter-productive, reducing tax receipts and making it harder for Europe’s ailing economies to prop up their public finances with borrowing from financial markets.
“We expect financial instruments issued in FTT jurisdictions, including government debt securities, to be quickly and negatively impacted as the tax gets factored into the purchase decision.
“Governments which already find it difficult to sell their debt will find it even more difficult in the future”, wrote Sally Scutt, managing director of the IBF.
The European Union believes the new tax could raise as much as €35 billion a year.
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