News Column

EU moves closer to shares transaction tax

May 7, 2014

Angela Monaghan



The European Union has moved closer to a tax on financial transactions after 10 member states agreed to implement the levy by 1 January 2016, angering George Osborne, who threatened a fresh legal challenge.

The group, led by Germany and France, told yesterday's meeting of European finance ministers in Brussels that they planned to introduce a tax on a phased basis, starting with the taxation of "shares and some derivatives". The details of how it would work have yet to be agreed.

Osborne said he would not hesitate to mount a fresh legal challenge if the final design of a financial transaction tax (FTT) had implications for the UK, even though Britain will not implement the tax.

Last week the European court of justice said Britain could not block attempts to use an FTT because it was not yet in operation. However, a legal challenge is still possible once an FTT has been finalised.

The chancellor has long been opposed to the levy, which he argues would damage the City and weigh on growth, jobs and investment in the UK. "We need to hear more about what is being proposed, and it is up to member states to decide whether they want to damage jobs and investment in their own economies, but if they seek to damage jobs and investment across the rest of Europe, then we're entitled to challenge that," he told the meeting.

Clearly frustrated, Osborne added that he would not back a tax that had an impact on Britain, arguing that member states in support of a levy should design it so it had an impact on their economies alone.

"Our view has been that the financial transactions tax that people have talked about is not a tax on bankers, as people present it; it's a tax on jobs, it's a tax on investment, it's a tax on people's pensions and pensioners and that is why the United Kingdom does not want to be a part of it.

"Our priority has to be to make sure, therefore, that the tax proposals that member states do come up with do not have an extra-territorial impact both on the UK and on the broader European economy." Osborne also criticised those member states in favour of the tax for a lack of transparency by failing to involve those not in favour in the discussions.

A joint statement was signed by ministers in Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia and Spain. Slovenia had previously been involved in the FTT talks but did not sign the communique.

David Hillman, spokesperson for the Robin Hood Tax campaign, which supports the imposition of the FTT, welcomed the commitment among some member states to press ahead with the tax, and urged them to resist watering it down.

"As the details are hammered out, leaders must ensure bank lobbyists do not succeed in seeing this tax watered down. Derivatives must be included - there is no point designing a bucket then punching so many holes in it that it becomes a sieve."

The Ukip leader, Nigel Farage, said that support in Europe for an FTT "shows that those in Brussels are now revelling in their efforts to destroy the British financial industry as well as hurt the millions of people who will see their pensions reduced because of this FTT measure".

George Osborne said the 10 states could damage

jobs and investment in their own countries, but

not in Britain



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Source: Guardian (UK)