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EU financial transaction tax illegal, say lawyers EU financial transaction tax illegal, say lawyers
(35 minutes later)
Imposing a financial transaction tax (FTT) in 11 European Union member states would be illegal, according to the bloc's lawyers.Imposing a financial transaction tax (FTT) in 11 European Union member states would be illegal, according to the bloc's lawyers.
The controversial tax aims to discourage risk-taking by taxing transactions of shares, currencies and bonds.The controversial tax aims to discourage risk-taking by taxing transactions of shares, currencies and bonds.
The 14-page legal opinion concludes the move would exceed member states' tax powers.The 14-page legal opinion concludes the move would exceed member states' tax powers.
It adds that the measure is also incompatible with the EU treaty.It adds that the measure is also incompatible with the EU treaty.
The FTT, also known as the Robin Hood tax and Tobin tax, is set to be adopted by 11 EU states, but not by the UK.The FTT, also known as the Robin Hood tax and Tobin tax, is set to be adopted by 11 EU states, but not by the UK.
But the legal document claims the transaction tax plan "exceeds member states' jurisdiction for taxation under the norms of international customary law", according to media reports.But the legal document claims the transaction tax plan "exceeds member states' jurisdiction for taxation under the norms of international customary law", according to media reports.
The non-binding opinion adds that the plan "infringes upon the taxing competences of non-participating member states", making it incompatible with the EU treaty.The non-binding opinion adds that the plan "infringes upon the taxing competences of non-participating member states", making it incompatible with the EU treaty.
The fact that only 11 EU members are signed up would make the tax "discriminatory and likely to lead to distortion of competition to the detriment of non participating member states", the document from the EU Council Legal Service says.The fact that only 11 EU members are signed up would make the tax "discriminatory and likely to lead to distortion of competition to the detriment of non participating member states", the document from the EU Council Legal Service says.
BBC World Service economics correspondent Andrew Walker says the countries concerned can press ahead, as this is just a legal opinion, but it is a warning that they would risk losing if it were to end up in court.
"This legal opinion is a very serious setback for the 11 countries' plans," he said.
FearsFears
The 11 countries currently going ahead with the FTT are Germany, France, Italy, Spain, Belgium, Austria, Portugal, Greece, Slovenia, Slovakia and Estonia.The 11 countries currently going ahead with the FTT are Germany, France, Italy, Spain, Belgium, Austria, Portugal, Greece, Slovenia, Slovakia and Estonia.
UK ministers fear it could be imposed on British firms trading with businesses based in one of those states.UK ministers fear it could be imposed on British firms trading with businesses based in one of those states.
In April, the UK government launched a legal challenge to the plans in the European Court of Justice.In April, the UK government launched a legal challenge to the plans in the European Court of Justice.
The City of London could be hit by the tax if, for example, a British firm trades with branches of French or German banks based in the capital.The City of London could be hit by the tax if, for example, a British firm trades with branches of French or German banks based in the capital.
The British government would have to collect the tax, but would not be allowed to keep it.The British government would have to collect the tax, but would not be allowed to keep it.
Business lobby groups are concerned that British companies trading with the UK branches of French or German banks could be hit by the tax.Business lobby groups are concerned that British companies trading with the UK branches of French or German banks could be hit by the tax.
The Robin Hood Tax campaign group said the UK's legal move was about "defending one rather rich square mile".The Robin Hood Tax campaign group said the UK's legal move was about "defending one rather rich square mile".