Fight Tobin tax in court, say banks

BANKERS are urging top-level British diplomats in Brussels to threaten the EU with a legal challenge if it tries to introduce a Tobin tax.

City A.M. understands that Prime Minister David Cameron’s negotiating team has solicited ideas from senior City figures on what powers could and should be brought back to the UK.

In response, the government has been told to take a hard line against even a Eurozone-only Tobin tax because it could affect transactions passing through London and could be legally dubious because it might contravene key treaty articles.

Cameron’s team has also been warned that it should block EU rules that will make it harder for the City to remain open to trading with non-European countries.

The Prime Minister has struggled to put substance into his promise to ensure that the UK has “safeguards” for the City in new treaty negotiations and asked for help with the details.

Currently, the FSA is charge of deciding what countries the UK can do business with and what standards apply. But Brussels wants its new international bodies like the European Securities and Markets Authority to be in charge of the process, which threatens the openness of Britain’s economy.

More generally, however, the City is deeply divided on the EU. Many firms would rather have a standardised set of rules across the region to simplify the business environment and avoid goldplating.