TAX NEWS - June 2010

French tax: French Banking Federation (FBF) Opposes Bank Tax

According to the French Banking Federation (FBF), the tax on banks announced by France, Germany and the UK is 'bad news' for the European economy.

In a recent statement, the FBF warns that the introduction of such a tax will encumber banks' own capital, reducing their capacity to provide credit, thus slowing the financing of the economy, and in turn undermining economic recovery. It underlines the fact that the levy will be introduced at a time when demands placed on banks in terms of their own capital will be considerably increased under the latest Basel regulations.

The FBF notes that the stakes are high, and that, as the situation currently stands, the tax would constitute a major handicap for the financing of the European economy, and notably in France where two thirds of company financing needs are assured by the banks.

Alluding to the fact that the majority of the G20 nations have announced their opposition to the introduction of a permanent levy on the banks, the FBF warns that without international agreement, Europe's economy will be heavily penalized.