Canada’s financial industry lobbyists have written to federal finance minister Jim Flaherty calling on him to continue opposing financial transaction taxes (FTT) at the G20.
The four major industry lobby groups — the Investment Industry Association of Canada (IIAC), the Investment Funds Institute of Canada (IFIC), the Canadian Bankers Association (CBA), and the Canadian Life and Health Insurance Association (CLHIA) — have sent a letter to Flaherty expressing concerns about the European Commission’s proposed FTT, which is scheduled to be implemented on Jan. 1, 2014.
In the letter, they say they are concerned about the possible impact on Canadian firms and investors, and on capital markets generally.
“We are deeply concerned by the broad extraterritorial reach of the FTT,” they say. “As proposed, it would tax Canadians investing in certain European securities even if transacted on North American financial markets and it would also tax transactions in Canadian-issued securities where a party to the transaction is established in an FTT jurisdiction.”
They argue that this means that Canadians with little connection to the country imposing the FTT “will experience diminished returns on their affected investments, and Canadian financial institutions and their clients will have to bear the costs associated with collecting and remitting the tax to European governments, while possibly taking on liability in that regard”; adding that there will be an outflow of tax revenue from Canadian financial institutions and Canadian investors to the EU. Additionally, they say that an FTT “would adversely distort the flow of capital in global markets.”
The groups call on Canada to continue voicing opposition to the FTT at future meetings of international leaders, including the upcoming meeting of G20 finance ministers on April 18-19.
“We would like to reiterate our strong view that regional FTTs should not be extended on a global basis, and should not be applied on an extraterritorial basis, due to the hazards imposed on interconnected capital markets,” they say.