EU tax will hit UK savers the hardest, IMA claims

A new tax on financial transactions would impact UK savers the most, those looking for the best savings rates have been told.

According to the Investment Management Association IMA, plans for a Financial Transactions Tax FTT across the whole of Europe as a bid to raise money for poorer countries will impact those in the UK with savings as they will ultimately pay a disproportionately high amount towards it.

"The FTT is a tax on UK savers. The tax will hit the UK the hardest, simply because it is Europe's pre-eminent global financial centre. Not only will the negative impact on UK GDP be higher than elsewhere in Europe, but most importantly, UK savers will take the hit on their pensions and other savings," explained Julie Patterson, director at the IMA.

She added that rather than hitting those responsible for the crisis – the banks – consumers who are already bearing the brunt of cutbacks will be hit by the tax, adding that charities' and pension funds' investments would also be hit twice by the FTT.

Ms Patterson argued that the FTT proposals will not deliver on their stated objectives and, worse, will have "no upside for regulators, governments or ordinary savers".

This view seemed to be echoed by the prime minister, who claimed that the proposals are "deeply confused" and suggested that the world is unlikely to agree to the tax.

David Cameron said that if other countries in the G20 want to introduce a tax to raise funds that is entirely their prerogative but claimed that the proposals are a bid to hide behind EU tax "as an excuse for political inaction on meeting targets for spending on development or indeed climate change".

He added that if global agreement could be achieved for a tax of this kind then that would be an argument in its favour but stressed that that was very unlikely.

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2011-11-09 13:08:31 © Moneyextra.com