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Industry groups slam European FAT

Friday 8 October 2010 - by Andrew Hickley

Interest groups across Europe have lashed out at proposals to introduce a regional financial activities tax, saying that it could encourage companies to relocate their operations outside the EU.

European insurance and reinsurance federation the CEA claimed that this week’s announcement by the European Commission would unfairly hit insurance companies despite being aimed at organisations more directly responsible for the financial crisis.

Michaela Moller, director general of the CEA, said: “The insurance industry was not the source of the crisis and should therefore not be included in these proposals."

“Insurers’ contribution to a stable and successful European economy must not be inadvertently harmed by the inappropriate read-across of regulation aimed at other sections of the financial services sector.”

The UK’s Confederation of British Industry claimed that the proposal would result in higher costs for consumers and reduced lending from banks to businesses.


Matthew Fell, the CBI’s director of competitive markets, said in a statement released today: “A financial activities tax within Europe would encourage financial services companies to relocate their operations outside the EU, hurting the economies of member states.”

Kay Swinburne MEP, economic and monetary affairs spokesman for the European Parliament's European Conservatives and Reformists, echoed the concerns of industry groups, saying: "The EU needs to drop this fixation with granting itself tax-raising powers.

“The EU must remain subservient to the national governments, and the best way of ensuring this accountability is through the budget process. If the EU has the power to raise its own taxes it becomes the master of the national governments, not their servant," he said.

The European Commission, in announcing its decision to back a financial activities tax, insisted that the financial sector was "under-taxed". Following a full impact assessment, it aims to announce specific policy measures in 2011.


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