Financial transaction tax a blow for insurers – PwC

The European Commission’s plans for a financial transaction tax would be a blow for insuers, says PwC insurance tax leader Colin Graham.

Graham said: “That the European Commission is pressing ahead with a financial transactions tax (FTT) is a blow for financial institutions, including insurers, markets and indeed consumers. At a time when insurers and reinsurers are trying to rebuild their capital base, it seems counter-intuitive to introduce a tax which would adversely affect this goal.

“With the prospect of global accord on a FTT remote, it’s the EU which could suffer most, damaging the competitive position of the EU. The FTT, if implemented in the EU, would provide a competitive advantage to those established outside the EU. Even if not implemented, this could damage perceptions of the EU amongst global businesses.

“Achieving unanimous agreement among the 27 Member States is likely to be difficult. It is possible that the tax could be introduced at a euro-zone level, but this would put euro-zone institutions and domiciles at a disadvantage. Given that each member state will be required to implement the FTT under its own local laws, there’s a real prospect of inconsistent application, which could distort financial markets in the EU itself.”