EU lawyers say transaction tax plan is illegal
By Huw Jones
LONDON (Reuters) - A plan to tax financial transactions in 11 European Union member states from 2014 is illegal, the bloc's lawyers have concluded, dealing what could be a final blow to the measure as proposed.
The opinion is not binding and Germany which backs the tax aimed at making banks pay governments about 35 billion euros a year after receiving taxpayer aid during the 2007-09 financial crisis, said it still wants swift introduction of the levy.
But the conclusions of the 14-page legal opinion will make it harder to push the measure through in its current form, particularly since it is already fiercely opposed by several EU members including Britain, the bloc's largest financial centre.
EU finance ministers will consider the conclusions and decide whether to scrap the idea, refine the proposal or chose a simpler levy such as the stamp duty Britain imposes on shares.
Germany said the legal concerns must be "cleared up". The proposal needs the backing of all 11 governments if the tax is to be put in place.
Britain, 15 other EU member states refused to support the transaction tax proposal raising questions about how it would work with only some members participating.
Germany, France, Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia were planning to adopt the tax on stocks, bonds, derivatives, repurchase agreements and securities lending.
But the legal services for EU member states said in their opinion dated September 6 and obtained by Reuters that the transaction tax plan "exceeds member states' jurisdiction for taxation under the norms of international customary law". Continued...