Opposition flares in France to the proposed Financial Transaction Tax
The AFG, the French fund association, has issued a strong statement describing the “devastating consequences” of the proposed Europe-wide Financial Transaction Tax (FTT) on the local asset management sector.
With more than €2.5trn assets under management, run by some 600 firms employing around 83,000 people, the French industry is at the top of world rankings, the association said. Its skill, along with “efficient and modern” regulation, has been one of the factors which has helped France through the financial crisis.
However the proposed FTT “seriously compromises the very existence of this industry”, the AFG charged. It warns of the “grave consequences” of its implementation, including penalising savers rather than speculators, the reduction of the number of funds on offer to investors, and the imposition of what is effectively double taxation on investments.
The proposals risk undermining local employment and failing to raise the revenue expected as financial transactions move outside the jurisdiction of the European Union, the AFG said. It suggested a lack of proper consultation about the measure, noting also that the declared goal of EU member unanimity of support for tax, first identified in September 2011, “has not yet been achieved”.
“To preserve its international client base, the French manager would have no choice but to domicile his funds and mandates in European countries not subject to the tax,” the AFG said.
“For our country this is a serious loss of sovereignty as decision-making on buying and selling disappears from national territory.”
The AFG noted an “undeniable national preference” which drives local asset managers to hold 25% of the debt of French non-financial firms, 35% of their corporate bonds, 20% of the free float of the CAC40, 44% of the debt of French credit providers and 22% of French OAT bonds.
“The French asset management industry wishes that the discussions at the European Council, in consultation with the European Parliament, will result in a framework free from these constraints.”