August 1, 1990
TO: MEMBERS - ONE PER COMPLEX NO. 29-90
RE: SECURITIES TRANSACTION EXCISE TAX (STET)
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As you know, Administration and Congressional leaders have
been meeting to develop a budget agreement aimed at reducing the
federal deficit. One of the revenue-raising measures under very
serious consideration is the imposition of a securities
transaction excise tax (STET). While details are unavailable, a
STET could be imposed both on the purchase and redemption of
mutual fund shares and on transactions in fund portfolio
securities. Moreover, a STET could be imposed on securities
transactions involving all types of mutual funds, including money
market funds.
In 1987, the Institute testified before the House Ways and
Means Committee in opposition to imposition of the STET because
of its likely harm to the U.S. securities markets and its
particularly adverse impact on investment companies (Attachment
A). More recently, on July 16, 1990, the Institute joined with a
number of other associations in submitting a letter (Attachment
B) to Administration and Congressional officials in opposition to
imposition of a STET.
You may wish to express your views about the STET and its
impact on your fund organization directly to the budget conferees
and the tax committees. Attachment C lists their names and
addresses.
If you have any questions or comments, please do not
hesitate to call me or Julie Domenick. We will keep you advised
of further developments.
Matthew P. Fink
Senior Vice President
and General Counsel