'This is not a matter of self-interest'
A financial transaction tax (FTT) will end up being paid for by individuals, not by the City, says Richard Saunders, chief executive of the Investment Management Association.
The Investment Management Association and seven other trade associations have recently written to the chancellor highlighting concerns over the proposed EU financial transaction tax. Why do you oppose the introduction of an FTT?
Because it is quite simply a tax on savings and pensions. It will end up being paid for by individuals and not by the City or the banks as many seem to believe.
Is this just not a case of the IMA and other organisations protecting their own self-interest? Is there a wider argument against its introduction?
There is no self-interest as far as the IMA is concerned. The tax would be paid by millions of individual savers, and we want to safeguard their savings and pensions. It would also inflict damage on the UK economy.
What effect do you think the FTT would have on the British economy were it to be introduced?
An FTT would have a serious impact on London's position as a leading global financial centre. A similar tax was introduced in Sweden in the 1980s but had to be abandoned. It had the immediate impact of moving trading away from Sweden, and the hoped-for extra tax revenues never materialised.
Do you see an EU FTT as disproportionately affecting the UK compared with other EU members?
Yes – given London's pre-eminent position as a global financial centre, and the volume of financial transactions conducted in the UK, the adverse impact would be much higher here than in other EU countries.
What message do you want George Osborne to send to the Commission?
We want the UK government to oppose unequivocally the introduction of an FTT – at EU or global level. Any FTT is a tax on saving.
Given that the financial services industry is exempt from VAT, is there not some truth in the argument that it is under-taxed when compared to other sectors?
No. First, it is not the industry that is exempt but only some of its services. The exemption means that consumers don't have to pay VAT on many financial services. It is not a benefit to the industry – in fact, it means firms cannot recover most of the VAT they themselves pay on goods and services they consume.
