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Full conclusions
The proposed FTT is likely to have significant and highly uncertain negative impact on the economy of the EU – not just for the financial centres such as London but for all business and investors in the EU. The Commission’s impact assessment already finds a significant negative impact, yet Oxera’s review suggests that the negative economic impact is likely to be larger than the Commission expects (or alternatively, the revenue raised by the tax will be much lower). With the additional uncertainty of financial service relocation and capital flight outside of the EU as well as “unintended consequences, the overall likelihood of the proposed tax increasing the total net tax revenues of the EU governments is uncertain.
In this context, Oxera would suggest that it would be important for the EU tax authorities to examine further the potential economic impact before a decision can be made on the proposed FTT.