LISBON, Feb 19 (Reuters) - A financial trading tax will hurt Portugal’s already weak competitiveness and the country should at least wait until its European partners fully apply it before following suit, the head of the NYSE Euronext Lisbon bourse said on Tuesday.
Portugal’s government said in this year’s budget it aims to impose a transactions tax of up to 0.3 percent, going beyond the European proposal for a tax rate of just 0.1 percent, but it has yet to put forward the actual legislation.
“For countries like Portugal that have a great need to attract capital, any such onerous move can only produce the opposite affect from what is intended”, Luis Laginha told a banking and investor conference.
“We’re not in favour of the tax, we say it loud and clear.”
The European Commission last week formally proposed the tax in 11 countries from 2014 to boost revenue and make banks pay for taxpayer help received in the financial crisis, raising up to 35 billion euros annually.
A further 16 EU nations have rejected the idea, with critics saying it will cut trading volumes, hurt future pensions and perhaps lead to double taxation.
Portugal, whose economy has suffered from weak competitiveness for more than a decade, is in its worst recession since the 1970s as it applies painful austerity measures under an international bailout programme.
The head of the Portuguese Banking Association, Fernando Faria de Oliveira, told the conference the planned tax was “another competitive disadvantage for Portuguese banks” that could “displace transactions, diminish market liquidity and have very negative effects on the economy”.
No government officials spoke at the conference.
Euronext Lisbon’s Laginha said that if the tax was adopted, Portugal should insist on its universal application and not impose it before all its financially relevant partners commit themselves to the measure.
Laginha said that the planned measure does not take into consideration Portugal’s weak ability to attract investment compared to its European peers and that its competitiveness would be further hurt as a result. (Reporting By Sergio Goncalves, writing by Andrei Khalip; Editing by Hugh Lawson)