Many money market funds would go out of business if the Financial Transaction Tax (FTT) comes into force, the European Fund and Asset Management Association (Efama) has warned.
Efama says recent comments from the European Commission supporting the introduction of the FTT and survey results with positive public response to such proposals highlight that the public have not yet “appreciated the very significant cost impact” that the FTT would have on the long-term savings of EU citizens.
As well as the effect on money market funds – who would pay 67% of the tax – the attractiveness of long term savings in equity, bond and balanced funds would reduce and institutional investors may switch their savings away from Ucits funds and towards savings deposits and life insurance products that are not covered by the FTT, Efama says.
The trade body has requested the European Commission to re-examine its proposal.
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