UK anger over 'secret' EU financial transaction tax plan

 
George Osborne has promised to mount a new legal challenge to a European Union financial transactions tax after 11 countries, led by France and Germany, agreed to introduce the levy by 2016. 

 

The Chancellor threatened new legal action, after a pre-emptive challenge was rejected last Wednesday, if Britain was asked to collect revenues for other European governments from taxes on transactions carried out in the City of London. 

"It's not a tax on bankers, it's a tax on jobs, on investment, on people's pensions," he said at a meeting of EU finance ministers on Tuesday. "That's why the United Kingdom does not want to be a part of it."

"If they seek to damage jobs and investment across the rest of Europe, then we are entitled to challenge that." 

In a bad-tempered debate, Mr Osborne was scathing about the lack of details surrounding the proposed Financial Transaction tax (FTT) including the basic issue of which shares and derivatives would be covered by it and the territorial scope of the levy.

"We have a situation where 11 member states are working up their proposals, largely in secret and we get a piece of paper handed to us all saying 'Oh this, by the way is what we've agreed'," he said.
"There is absolutely nothing on crucial issues: of which derivatives are going to be included. There's absolutely nothing here on the potential extraterritorial impact. I'd like to hear what the issuance rules are. Is this tax going to apply to shares and derivatives issued in all member states?." 

Algirdas Semeta, the EU's taxation commissioner, rejected Mr Osborne's threat of legal action after the European Court of Justice last week threw out a British legal challenge against the proposals.
"We should be clear that the ECJ rejected UK's challenge on the FTT. This should pave the way for its adoption," he said. "We have already clearly presented our opinion that the proposal does not violate territoriality rules." 

However, Sweden announced that it was "much closer to supporting the UK on the legal case" and Luxembourg joined Mr Osborne in attacking proposals that were "extremely vague".
"We think the FTT is a very inefficient and costly tax which will have a detrimental impact on investment," said Anders Borg, the Swedish finance minister. "The lack of information on the proposal is a real problem." 

The 11 countries - Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain - have agreed to begin enforcing an FTT on shares and unspecified derivative contracts within two years. 

Negotiations between the countries have been dogged by disagreements and have already overrun by two years, wrangling that has led to the lack of detail surrounding the tax.
The standard rate for taxing transactions on trading bonds and shares is expected to drop to just 0.01 per cent from 0.1 per cent proposal, a compromise that will reduce revenues from the tax from €35 billion to around €3 billion. 

Ahead of the meeting on Monday, Business Europe, a pan-European industry federation, wrote to EU finance ministers warning against the FTT. 

"Even a narrowly scoped FTT will still have a negative impact on growth and jobs, while leaving the door open for further taxation through a step-by-step approach risks creating unnecessary uncertainty for investors," wrote Markus Beyrer, Business Europe's director. 

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10810978/UK-anger-over-secret-EU-financial-transaction-tax-plan.html