Letter Responding to European Commission’s Consultation Paper on Taxation on the Financial Sector

MFA filed a comment letter with the European Commission in response to the Commissions consultation paper on taxation of the financial sector. In the consultation paper, the Commission discussed various potential taxes, including variations of a financial transaction tax and a financial activities tax. In our letter, we discussed: (1) the potential for market and capital dislocations for a narrow-based or EU-level transaction tax; (2) the likelihood of adverse consequences (such as reductions in the value of assets subject to a tax and increased costs of capital) for all investors and companies from any financial transaction tax; and (3) the importance of tailoring any financial activities tax to avoid overly broad measures that go beyond stated policy goals (for example, taxing financial institutions that did not receive government support if the policy reason for a tax is to recoup money from institutions that did receive government support).