Chancellor George Osborne has renewed the UK’s opposition to the financial transaction tax being developed by 11 EU member states, slamming the “secret” horse-trading behind the emerging proposals.
The FTT is being put together under enhanced cooperation rules that allow EU laws to be passed if they have the backing of at least nine member states. Last week, the European Court of Justice rejected a challenge from the UK against this.
Speaking at a meeting of European finance ministers in Brussels this morning, Osborne said European law allows enhanced cooperation to be used on the condition that “all member states participate in the deliberations”, but that this condition is not being met.
He said: “Here we have a situation where 11 member states are working up their proposals largely in secret, I do not know how involved the Commission is in this or not. Then as we start our discussions here we get a piece of paper handed to us all by the 11 member states saying this is what we have agreed.”
The suggested FTT would impose a levy of 0.1 per cent on transactions of shares, currencies and bonds, while one of 0.01 per cent would be charged on derivative trades.
Despite complaining he only had “five minutes to read it”, Osborne said the piece of paper he had been given had no detail on which derivatives would be included and “absolutely nothing” on the potential for the tax to hit member states who are not participating – one of the UK’s key concerns.
He said: “These are real issues that effect investment decisions across the world in the European continent and we are entitle to a clearer explanation of what was agreed last night.”
“If European nations around this table want to proceed with an FTT that only has an impact in their area in their economy then that is their business. Our view is the FTT that people have talked about is not a tax on bankers which is what people present it as. It is a tax on jobs, investment and pensioners.”
Osborne also said a growing number of European bodies were raising concerns about the tax. He cited, among others, the European Investment Bank which this morning said an FTT could impact the cost and availability of its lending.
The European Commission says the tax could raise as much as £28bn a year. Despite the UK’s legal challenge – the failure of which Econ chair Sharon Bowles described to Money Marketing as “entirely predictable” – and protests from industry, efforts to get the tax up and running look set to continue. Also speaking at the meeting, Commissioner for taxation Algirda Semeta said: ”It is possible for a decisive step could be taken this year, and that should be our aim.”