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The design of the financial transaction tax (FTT) is inferior, and risks leading to more risky behaviour by discouraging trades, the European Commission has been told.
The comments come as the European Commission gathers opinions on how it should improve financial regulation introduced since the 2008 financial crisis, and saw the Czech Republic’s Ministry of Finance warn that the tax poses an “existential danger” to efficient capital markets.
Denmark’s largest pension fund, ATP, said the tax was of “inferior” design and that its application would have an unpredictable effect unless the number of transactions it covered were scaled back significantly.
The Federation of Finnish Financial Services (FKI) echoed the Czech Republic’s concern that the tax could lead to impaired financial markets, while it raised the possibility that trades would simply move to countries outside the FTT zone.
It warned of the “direct” impact for Finland’s pension sector, by lowering returns across the industry.
“Costs of the tax would have to be covered either by raising pension contributions or by lowering pension benefits,” the FKI predicted.
Until late 2015, 11 EU member states were pursuing the FTT.
Estonia eventually withdrew its support, leaving the governments of Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain as supporters.
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