Europe rejects UK's financial transaction tax challenge
Europe's top court has rejected the UK's challenge to the
introduction of an EU financial transactions tax (FTT), which Ministers
have said will damage British firms.
The European Court of Justice (ECJ) described the UK's challenge as
premature, since the details of the tax had not been finalised. The FTT
will be adopted by 11 EU states, but not by Britain. The UK said it was
prepared to take further legal action.
"The government is determined to continue to ensure that the
interests of countries outside of the single currency, but inside the
single market, are properly protected," a UK Treasury spokesman said.
The levy, often described as a Tobin tax or 'Robin Hood' tax, aims at
raising public funds and discourages speculative trading by taxing the
transactions of shares, currencies and bonds. Of the 27 EU member
states, the 11 going ahead with the FTT are Germany, France, Italy,
Spain, Belgium, Austria, Portugal, Greece, Slovenia, Slovakia and
Estonia.
Those countries had not yet decided how the tax will work, the ECJ
said, so the UK's challenge was premature.
The City of London could be hit by the tax if, for example, a British
firm trades with branches of French or German banks based in the
capital.
"Once the tax has been worked through, then that is when the UK needs
to step in and challenge any extra-territorial elements of that tax,"
said head of tax at international accounting body ACCA,Chas Roy-Chowdhury.
"That is when I think they could win if the tax is not modified quite
drastically," he said.
UK Prime Minister David Cameron had previously said the tax was "not
a good idea" and that it would not work unless applied globally.
And UK Chancellor George Osborne has also raised concerns that the
cost of the tax would be passed on to pensioners and savers.
But campaigners have said the tax would raise valuable funds for
public services, and accused the UK government of "defending one rather
rich square mile".
- BBC |