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UK House of Lords committee slams FTT
11 December 2013
Concerned about impact of proposed tax for 11 EU member states on UK economy
A UK House of Lords committee has called the proposed EU
Financial Transaction Tax (FTT) "alive and deadly".
The comments slamming the FTT as "unjustified and misconceived"
were published in a report by the Economic and Financial
Affairs sub-committee of the House of Lords European Union
The proposal has been highly controversial in the financial
industry, and even led to EU lawyers branding it illegal in a
non-binding legal opinion.
However the European Commission has given the go-ahead for 11
EU member states to implement the tax - known as enhanced
cooperation - as opposed to introducing it in all 27 member
states. The committee said that this option could significantly
damage the UK and rest of the EU.
Lord Harrison, committee chairman, said:
"The committee is still firmly of its original view that an EU
Financial Transaction Tax is flawed and potentially damaging to
the economic well-being of the UK. What we now have before us
is a proposal to allow a breakaway group of EU countries to
proceed with their own FTT, which would have a serious negative
impact on the UK and other non-participants.
"In giving this the go-ahead we believe the commission has only
paid lip service to the legal requirements for enhanced
cooperation, and has failed in its duty to countries such as
the UK who oppose the move.
"The commission has a duty to all 28 of its Member States
equally, and this sort of cavalier approach to legislation
risks making losers of us all."
The committee identified "serious flaws" in the enhanced
cooperation method, one being that it could lead to the UK
being forced to collect tax on behalf of other member
The committee then proceeded to criticise the UK Government for
its "slowness to appreciate the potential damage to the UK that
such a tax could present". However, it did welcome the
government's decision to instigate a legal challenge to annul
The committee then said it was frustrated the Commission had
been "dragging its feet" in giving details on what obligations
UK authorities would be under to collect the tax. It added it
was "unacceptable that the full implications of the proposal
were not made clear before the vote on enhanced cooperation
The tax would affect pension funds in the UK even if the
country did not sign up to the FTT, according to James Walsh,
policy lead: EU & International, UK National Association of
Pension Funds (NAPF).
"The real problem with this new tax is that it would hit
pension funds and savers in the UK, not just in the 11
participating countries. The FTT would apply when UK pension
schemes buy shares in companies or do business with banks based
in the 11 FTT Member States.
"The FTT has made slow progress due to disagreements between
the 11 participating nations, but it would be a mistake to
think it is slipping off the EU agenda. The new German
Government has made a clear commitment to the FTT. Even though
Germany is indicating there will be an attempt to protect
pensions, the way is now clear for negotiations to