A study, commissioned by the International Regulatory Strategy Group (IRSG) and authored by London Economics, considers the impact of the proposed financial transactions tax (FTT) on European households' savings in six EU member states. The member states
covered in this study include four that plan to introduce the FTT (Germany, Italy, Spain and Slovakia) and two who do not (UK and Luxembourg).
The study found that countries planning to introduce the FTT are likely to suffer significant losses in household savings portfolios as a result of taxing a broad range of financial instruments. In larger states with sizeable capital markets, this loss could
amount to as much as €205bn, or 16% of the total value of equity and debt holdings. Households in the UK and Luxembourg also stand to lose an estimated €4.4bn and €0.4bn respectively, as a result of the FTTs extraterritorial reach.
If the FTT is borne by the end-users of financial services, the study cautions that this will hold back household consumption and slow economic growth
© Finextra Research 2014