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Financial Transaction Tax: No Need to Panic Over European Court Ruling

If you were to believe the media hype, and statements from politicians in the UK and Europe, Britain's challenge to the imposition of the Financial Transaction Tax (FTT) is dead in the water.

The left-wing press, led by the Guardian, are gleefully claiming that George Osborne's attempts to "go in to bat for bankers" has failed. On the right wing Boris Johnson is rending his garments and bewailing disaster (well he is a classical scholar as well as Mayor of London) and dear old Nigel Farage is claiming that it shows that the EU is moving outside its remit to impose taxes on individual nations which is properly the sole responsibility of each member state.

Of these only Nigel Farage has a point, but to be fair that is pretty much the line that George Osborne and the UK took to the European Court of Justice (ECJ) and despite the press headlines the ECJ have not rejected their argument. Far from it.

The ECJ's ruling is that there is as yet no European law in place regarding the FTT, simply a proposal for one to be introduced, a challenge against the FTT itself or even elements of it is premature. However thie ruling that the UK's challenge is premature does not prevent the UK later challenging any European legislation on the FTT eventually adopted by the 11 Member States under the enhanced cooperation procedure.

It follows that the ECJ’s judgment is not dismissing the UK’s arguments in substance, and indeed these have not even been considered, and those will be able to be argued by the UK once the FTT Directive has been adopted.

Some people are criticising the UK for making a premature challenge but in fact the UK government is hoping that their stated concerns and the acknowledgement that they will be able to challenge the final version of legislation adopted by the European Parliament will influence the policymakers who are drafting the legislation to take on board their concerns. Quite a clever strategy in fact.

You can read more tax related articles at our sister website - Link4Business

 

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