Not surprisingly, the recent political elections in Germany have brought the question of financial transaction tax (FTT) back to the fore. Basically, the Social Democrats (SPD) are making it a condition of participation in a European banking union. The reason for this, they claim, is that: “For the SPD, it’s important that taxpayers in the future are no longer liable for banks.” Have to admit I have a fairly high tolerance level these days for politicians weighing in with their ill-judged comments on the financial industry, but this wins my award for one of the worst yet. Please can someone point out to the SPD that the people who pay these taxes are not the banks or broker dealers that act as middlemen, but you and I who invest our hard-earned cash in pensions, insurance and other savings schemes. Just like any other sales tax it is the end user that pays, not the middleman.
Add to this the extra cost that we will all bear in calculating, collecting and validating different levels of FTT across each European country and you start to see a big mess. When you also add in the fact that these markets may be accessed by investment firms from outside the EU (possibly, though, with EU residents as investors in their funds), the whole thing looks pretty asinine.
By way of example, let’s assume that governments around the world decided that car manufacturers were systemically important and that “the taxpayer should no longer be liable for them”. So the solution – let’s put up the sales tax on all new cars – really?