Opposition to Financial Transaction Tax

Monday 22 April 2013

On 19 April 2013, the UK Chancellor of the Exchequer announced that the government had lodged an application at the European Court of Justice (ECJ) against the EU financial transactions tax (FTT).

The Chancellor said that he was not against all financial transactions taxes and other countries establishing taxes similar to those imposed in the United Kingdom, i.e. stamp duty on shares or the bank levy on the financial sector. What he is against is the European Commission coming up with a financial transactions tax that has an impact on, and is damaging to, the United Kingdom. Therefore, the United Kingdom does not want to be affected by an EU-wide FTT even though "the United Kingdom will not be joining other Member States willing to participate through enhanced cooperation."

For this reason, he has mounted a legal challenge in the ECJ because, according to his view, that is the correct way to handle the issue. Referring to the possible extraterritorial effects of the EU FTT, the Chancellor declared that the United Kingdom's position is that other EU Member States can introduce, if they want, an FTT in their own Member States but not if the FTT impacts on the United Kingdom.

Mr. Luc Frieden, Luxembourg minister of finance, stated that Luxembourg supports the UK government's legal challenge to the financial transactions tax. Without indicating precisely how Luxembourg would support the UK, the minister reminded the audience that Luxembourg is not keen to participate in a mechanism that could put in danger the level playing field between financial centers. 
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