Financial Transactions Tax Will Hurt Millions of Hardworking People

The European Union's controversial Financial Transactions Tax will hit the pensions and investments of millions of hard working people and would not exclusively target so-called City 'fat cats'.

According to the Association for Financial Markets in Europe (AFME) report to be released today, the European Commission will be warned not to forge ahead with the tax, due to the "negative economic impact of deterring financial transactions that bring benefits to the wider economy."

In January this year, EU finance ministers paved the way for 11 eurozone countries to design a FTT, which will affect equities, bonds and derivatives trades.

It is expected that a stock or bond trade will receive a 0.1% tax rate, while a financial derivatives contract will receive a charge of 0.01% for every transaction.

It's delusional to believe, as some proponents are suggesting, that the FTT would only affect so-called City fat cats.

The levy would also hit those with a pension, life assurance, insurance, a mortgage, or those exchanging cash for their holidays - so the vast majority of people - because in all likelihood the cost of the new tax will be passed on to end consumers.

It is widely assumed that pensions will be dealt the biggest blow due to the lower returns they would face from the tax of transactions made by pension funds throughout Europe.

This fatally flawed, Brussels-led levy would not only hit the pensions and investments of millions of hard working people, it would damage the UK's financial services industry which is vital to sustainable economic growth.

European policymakers should remember that the EU is only a part of the entire global financial community and the introduction of the FTT would provide international competitors with a significant competitive edge.

A month ago Britain launched legal proceedings against the FTT that was agreed by 11 EU member states earlier this year.

According to another report commissioned by the City of London Corporation, detailed the repercussions of the eleven Eurozone countries implementing the FTT and how it could lead to a £4bn (€4.7bn /$6bn) rise in the cost of issuing UK debt.

Nigel Green is the CEO at The deVere Group, which is the world's largest independent international financial consultancy group.

Within excess of $9bn of funds under administration and management, deVere has more than 70,000 clients in over 100 countries.