Three U.K. business lobby groups told the European Union its proposed financial transaction tax will harm economic recovery and damage the trading bloc’s competitiveness.
The tax will be paid for by consumers, rather than the financial companies it targets, in the form of price increases, the Confederation of British Industry, the British Bankers’ Association and EEF, the U.K. manufacturers’ organization, said in a joint letter today, seen by Bloomberg News.
The EU estimates the tax could raise 30 billion euros ($39 billion) to 35 billion euros a year. The plan would charge a 0.1 percent rate for stock and bond trades and 0.01 percent for derivatives transactions, with some exemptions for primary- market sales and trades with the European Central Bank.
“The FTT is fundamentally a tax on growth and should be viewed as a major risk to Europe’s ability to recover from the current economic problems it faces,” said the letter to EU President Herman Van Rompuy, European Commission President Jose Barroso and Michael Noonan, finance minister for Ireland, which holds the EU’s rotating presidency.
The tax would affect everyday goods such as fixed-rate mortgages, gas and electricity, where suppliers use derivatives to hedge their exposure to market prices, as well as ordinary financial deals, the lobby groups said.