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The House of Lords EU sub-committee on financial and economic affairs has published a report, Towards a Financial Transactions Tax?, stating that the European Commission’s proposals have ‘significant flaws’ and that the residence principle is ‘impractical and unworkable’.
It also suggests that the proposals would place the City of London under severe threat and force financial institutions to relocate away from the UK and the EU as a whole.
The report adds that the commission’s argument that an EU-wide financial transactions tax would pave the way for a global tax is wholly unrealistic, given the USA’s opposition to it.
Commenting on the report, Lord Harrison, committee chairman, said:
‘Even if the FTT was only adopted by a small group of Member States, there would still be huge implications for the UK, not least because transactions between UK financial institutions and those within the jurisdiction of the FTT would still be liable for the tax.’
