Setback for EU’s bank tax proposal

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 findings are not binding but will make it harder to introduce a measure backed by Germany and others to make banks pay governments about 35 billion euros a year after receiving taxpayer aid during the 2007-09 financial crisis.

The 14-page legal opinion will be put to EU finance ministers who must decide whether to scrap the idea or chose a simpler levy such as the stamp duty Britain imposes on shares.

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It was not clear when EU finance ministers would discuss the findings. Britain, EU’s biggest financial centre, and several other states, have opposed the transaction tax proposal. They refused to sign up to the plan, raising questions about how it would work with only some members participating.

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