16th September 2013
It was interesting to hear that the EU’s own lawyers have declared its plans for a Financial Transaction Tax (FTT) to be illegal.
The planned tax on financial trading - which 11 of the EU’s Member States have chosen to participate in – is due to take effect from next year. Desperately trying to plug the large hole in its finances following mismanagement of the Eurozone, the EU has chosen to target an easy scapegoat – the financial services industry, the large bulk of which is based in the City of London.
Thankfully, the British Government has chosen to stay outside of the scheme. Had it signed up, the effect on our recovering financial services sector would have been highly damaging. Even with the UK outside the scheme, however, it still threatens the UK’s economy.
A legal opinion commissioned by the European Commission, seen by Reuters, reveals that the FTT “exceeds Member States’ jurisdiction for taxation”, “infringes upon the powers of taxation of non-participating Member States” and would create an “obstacle” to the free movement of capital and services within the EU’s Single Market.
I have been a consistent opponent of the FTT. It will increase costs for pension providers and raise the cost of capital for firms. It will reduce investment and cost jobs. I hope the EU will now admit that its plans are flawed and scrap the FTT immediately.