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The UK has launched a legal challenge relating to the financial transaction tax (FTT), which 11 European Union countries intend to sign up to under EU provisions for "enhanced cooperation" between members.
The challenge was lodged on the deadline, and follows advice from the House of Lords European Union Committee earlier this month for the Government to seek "urgent legal advice" on the issue. The committee had warned of "far-reaching adverse consequences for UK resident institutions," and accused the Government of "complacency." It explained in a letter that the tax would apply to UK financial institutions when dealing with countries that have the FTT, and that there was a lack of detail as to how the tax will be collected and how it will affect subsidiaries outside the FTT zone.
Speaking to journalists in Washington, Chancellor George Osborne was quoted as saying: "We are concerned about the extra-territorial aspects of the commission's proposal for the tax and I think that concern is shared by some other countries." He added that the UK was not against the FTT in principle, although UK Prime Minister David Cameron is on record as describing the tax as "simply madness."
The 11 countries planning to introduce the tax are: Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. The EU Commissioner for Taxation, Algirdas Semeta, claims that the cost of the tax will be "very small," and that cooperation on the issue will strengthen the Internal Market.
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