The review finds that the proposed FTT is likely to have a significant and highly uncertain negative impact on the EU economy—not just for international financial centres such as London, but for all business and investors in the EU. The Commission’s economic impact assessment already finds a significant negative impact, yet Oxera’s review suggests that the negative economic impact is likely to be larger even than the Commission expects (or, alternatively, the revenue raised by the tax will be much lower). With the additional uncertainty of financial services relocation and capital flight outside of the EU, as well as ‘unintended consequences’, the overall likelihood of the proposed tax increasing total net tax revenues of EU governments is uncertain.

In this context, Oxera would suggest that the results of the Commission’s economic impact assessment do not provide an appropriate degree of confidence on the potential economic impact and consequent net impact on tax revenues. A further examination of the potential economic impact would therefore be necessary before a well-informed decision could be made about the proposed FTT.

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