U.K.’s Transaction Tax Plan on hold by the European court
The U.K. lost a bid to counter plans by 11 European Union nations for a common financial-transactions tax, after the bloc’s top court said it was too soon to rule on the legality of the move.
The European Court of Justice rejected calls from Britain for the annulment of a January 2013 decision authorizing talks on the tax plan by the coalition of countries, saying that it can’t prejudge the outcome of negotiations. The ruling means the U.K. will need to decide whether to embark on a further court challenge against the tax, if a blueprint for the measure is adopted by participating nations.
“The U.K. accepts that its action might be regarded as premature,” the ECJ said in a statement. Britain made the challenge as “a precaution” that preserves its right to take further legal steps against the tax plan, the court said.
The court ruling comes before any deal has been reached on the design of the tax by participating countries.
EU finance ministers allowed the coalition of countries a year ago to move forward on developing a common financial-transaction tax, based on a draft plan expected to produce as much as 34 billion euros ($47 billion) a year, including 11.8 billion euros in Germany. EU lawmakers have said the rule is needed to bolster financial firms’ tax contribution and rein in high-frequency trading.
Since the negotiations among the 11 nations started, progress has been hampered by clashes between governments over what types of securities should be covered by the tax. The measure is set to be discussed by the bloc’s finance ministers next week.
EU Tax Commissioner Algirdas Semeta said this month that a “substantial amount of work” is still needed on the plan.
The U.K. challenge focused on concerns that the measure would hit London’s banking center in ways that contravene the EU’s treaties.
Source: bloomberg
