Europe divided as transaction tax row builds

Tim Wallace
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THE BITTER row over France and Germany’s financial transactions tax (FTT) spilled over into a very public spat yesterday as more countries backed George Osborne’s opposition to the tax.

Eleven EU nations want to tax shares and derivatives issued in their countries, wherever they are traded – meaning activity in London would be hit even though Britain is not involved in the tax.

“The FTT is not a tax on bankers – it is a tax on jobs, it is a tax on investment, it is a tax on peoples’ pensions,” Osborne told the Ecofin meeting of finance ministers. “If they seek to damage jobs and investment across the rest of Europe, we are entitled to challenge that.”

Leaders from countries including Sweden and Denmark complained about the FTT, arguing the tax has been planned behind closed doors, unfairly keeping out nations which will be affected.

They also attacked the decision to plough on with the FTT despite warnings from the European Commission’s own legal advisers that it appears illegal to impose taxes on actions in other countries.

Even the Netherlands, which is interested in adopting the tax, is unhappy that its officials cannot get any information on the FTT.