Outgoing economic and monetary affairs committee chair Sharon Bowles says the European Court of Justice recent rejection of the UK’s financial transactions tax challenge was “entirely predictable”.
Last week the ECJ said it was too soon to rule out the prospect of a financial transactions tax. The UK had challenged the tax on the basis that the 11 countries backing the tax should not be allowed to use a special European Union coordination procedure known as ‘enhanced cooperation’ to get it off the ground.
Enhanced cooperation allows EU laws to be passed if they have backing of at least nine countries. The UK is concerned this will allow the 11 countries supporting the FTT, which include Germany and France, to tax UK firms and transactions.
Speaking to Money Marketing, Sharon Bowles says: “Challenging whether it could be done under enhanced cooperation was always going to fail. But, the UK was afraid that if it did not put something in at that stage the ECJ would say they were too late when they complained later.
“The Government liked the idea of telling the City ‘we are on your side’ so it served a PR purpose. In a sense there was nothing wrong with it as a way to indicate the UK Government is serious but there should have been some management of expectation.”
Despite rejecting the challenge, the ECJ appears to be open to future challenges when the FTT is closer to be implemented.
Bowles adds: “This song and dance that the ECJ is anti-British coming out from British MEPs is just total twaddle. It was entirely predictable. The ECJ does not go in for forward guidance principles.”
In a statement following the ruling, the Treasury said: “The Government is determined to continue to ensure the interests of countries outside of the single currency but inside the single market are properly protected as the euro area continues to integrate, including with any proposal for a financial transactions tax.”
Bowles’ comments come as European finance ministers meet in Brussels this morning to discuss the tax for the first time since the ECJ’s ruling.