The government has lost its legal challenge to the European plan to implement a financial transactions tax (FTT) according to the Press Association. The tax is expected to do significant harm to the City of London, Europe’s biggest financial centre.
The government took the EU to the European Court of Justice (ECJ), which is like the US Supreme Court, to stop 11 European states implementing the tax. However, the challenge was thrown out as detailed plans on implementation had not yet been put together.
The British government has said it will not implement the tax but it would still be expected to collect the revenue from transactions between British and European firms. Also whilst business are expected to leave the countries affected by the tax they are likely to move out of Europe altogether, so any benefit for the City of London would be far outstripped by the costs.
Syed Kamall, leader of Conservatives in the European Parliament, said: “This is grave news and further justification for our campaign for the three Rs in Europe – reform, renegotiation and an in-out referendum.
“It is clear that the court has rushed to this judgment, without even taking time to receive advice from the advocate general or to hold a public hearing, as is usually the case.
“I believe it calls into question the court’s supposed role as a neutral referee. It does not inspire confidence in the court’s ability to protect UK interests or the proper working of the single market as the eurozone goes further down its road of integration.
“I sincerely hope the Government will lodge an appeal and that this hasty decision will be overturned once the right level of reflection and rigour is applied.”
But TUC general secretary Frances O’Grady said: “The Chancellor should never have taken this case and used taxpayers’ money to defend City fat cats. It’s time the financial sector paid its fair share of the costs of the economic crisis they helped cause.
“A Robin Hood Tax would rebalance the economy away from thinly-disguised gambling with our pensions, and provide the tax revenue needed to defend quality public services like health and education, as well as tackling climate change and global poverty.”
A spokesman for the Treasury insisted that the ruling did open the door to a future legal challenge to the proposal, when its full details had been confirmed.