The National Association of Pension Funds (NAPF) has responded to the European Court of Justice’s (ECJ) ruling on the UK challenge to the introduction of a European Union financial transaction tax.
NAPF’s James Walsh stated that a financial transaction tax (FTT) was not the best way to deal with excessive risks or combat bad behaviour within the market.
Walsh warned that the costs of the FTT would undoubtedly be passed on to millions of private savers and pension scheme members in the United Kingdom.
He also supported the UK Government’s challenge to the legality of the FTT proposal as it is highly likely its introduction would affect UK pension schemes and members (despite the tax not being applied by the UK Government).
Walsh stressed that the ECJ had not stated the UK’s position was wrong, merely that it was premature to challenge because the full details of the proposed FTT are not yet clear.
He concluded his response by stating the NAPF urged the Government to remain vigilant against this threat to British savers and pensioners.
Chris Morgan, head of Tax Policy at KPMG in the UK, said that although the UK’s challenge had been rejected by the ECJ the battle was far from over.
Morgan explained that the FTT would only be implemented in states that choose to be bound by it, and the core of the UK’s objection to the tax is the impact it would have on UK financial institutions, creating a cost for the UK even though the country had not opted into the FTT.
Morgan added that a further UK challenge to the FTT was entirely possible, and that the impact of the FTT on states that had chosen not to participate would have an effect on the prospect of success in a subsequent challenge.