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The Financial Transaction Tax could cost Belgium 23,000 jobs

AmCham Belgium has already expressed its concerns regarding the EU’s proposal to raise revenues through a Financial Transaction Tax (FTT). A new report adds that the tax could cost Europe 641,000 jobs.

While its proponents argue that the Financial Transaction Tax will discourage speculative trading and bolster debt-laden public finances, it could also cost jobs according to a recent report by the New Direction think-tank.

As Europe continues to recover from the economic crisis, the European Commission argues that the financial sector should contribute its fair share to the effort. This was the prime justification for the FTT, a tax which would levy 0.1% on equity and debt transactions and 0.01% on derivatives. Only 11 out of the then 27 EU Member States agreed to the tax, but in recent months, uncertainty regarding the tax has grown and some nations are calling for more research on the potential impact of the FTT.

New Direction’s report estimates that the FTT could result in the loss of 641,000 jobs across the European Union – and 23,000 jobs in Belgium alone. These losses stem from the diminished output of the financial services sector, which would also have repercussions on computer, legal and accounting services.

The report also points out that the FTT will effectively translate into the government taxing itself as government bonds would also fall under the scope of the FTT. Hence, governments would be taxing their own public borrowing and increasing the cost of public debt.

AmCham Belgium’s position

These two outcomes, on top of the decreased financial activity as explained in our previous Position Paper, make the FTT, in its current form, a profoundly counterproductive measure.

AmCham Belgium’s Legal and Taxation Committee is actively monitoring the FTT debate and urges the government to carefully reassess the consequences of the proposal before it is enacted. For a more detailed analysis of the repercussions of the FTT on business in Belgium, please refer to our Position Paper, published in July 2013.

If you would like to support AmCham Belgium’s advocacy on the FTT, please send an email with your name and company to gchamber@amcham.be

 

 
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