The House of Lords European Union committee has slammed European Commission proposals for a financial transaction tax, saying it has failed to make a case for the levy and warning over 70 per cent of its revenue could come from the City of London.
In September, the EC proposed imposing a tax of 0.1 per cent on the buying and selling of bonds and shares and a tax of 0.01 per cent on the buying and selling of derivatives.
The House of Lords’ report into the future funding of the EU, published last week, says it would be “unsuitable” to use the tax to fund the EU after the commission claimed it could contribute €37bn a year, almost 23 per cent of EU funding, by 2020.
The report says: “Firstly, the tax is likely to fall disproportionately on a minority of member states, and especially the UK, which could account for 71 per cent of overall revenue under the Commission’s proposal. Secondly, we cannot identify any genuine link between EU policy objectives and an FTT.
“The Commission has failed to make a case for an EU wide financial transaction tax.”
The UK refuses to back an EU-wide transaction tax, with Chancellor George Osborne warning in last November’s autumn statement it would hit savers rather than banks.
Baronworth director Colin Jackson says: “Institutions will not take the hit, endusers will, so they should scrap it.”