European Investors’ Association, which represents retail and institutional investors throughout Europe, has requested the Slovak government to take investors’ interests in Slovakia and within the European into account and lend no further support to the Financial Transaction Tax (FTT). European Investors is deeply worried that a FTT declines return on investment for investors, has a wider negative impact on the Slovak and European economy and shall never meet its intended goals.
And the end of this month, the participating EU Member States will host a decisive meeting on the FTT with a final round of negotiations. They will discuss the impact of a FTT on the real economy and consider potential carve outs. In the run-up to this meeting, European Investors sent a letter to the Slovak government to emphasize the negative impact of a FTT.
Slovak consumers and SMEs will foot the FTT-bill
European Investors stresses that financial institutions will pass on the costs related to a FTT to consumers. In practice, Slovak investors and SMEs will end up covering the costs of a FTT in the form of higher prices for financial services.
Moreover, the Slovak financial sector will suffer from a FTT, as the tax drains financial resources from the Slovak capital market. This will make capital-raising more difficult, burden cross-border investment and stifle economic growth. Furthermore, a FTT will dampen trading volumes on the financial market and – as recent fiscal experiments in Sweden and Belgium have shown – seriously harm public finances.
Estonia pulled out of the FTT-group in 2015, stressing the severe impact a FTT would have on its financial sector and public finances. This shows the arguments above are compelling.
FTT burdens the Slovak financial sector and economy
A FTT would also worsen the competitiveness of Bratislava as the financial centre of Central Europe and within capital markets in general. This could trigger an exodus of businesses and trading to neighbouring countries which have not implemented a FTT. Furthermore, a FTT will reduce the inflow of new businesses and foreign investment into Slovakia and benefit its competitors in their efforts to lure financial institutions from the UK to the main land in the wake of Brexit negotiations.
For more information, please contact:
Pieter Hanson (Policy Advisor at European Investors’ Association)
Email: firstname.lastname@example.org Tel. nr.: +31 (0) 6 216 00 292