A planned European Union (EU) Financial Transaction Tax (FTT) may be killed on legal grounds, according to legal services for EU member states.
In a document they stated that the plan "exceeds member states' jurisdiction for taxation under the norms of international customary law".
The plan is not compatible" with the EU treaty "as it infringes upon the taxing competences of non participating member states", the document obtained by Reuters said.
The FTT would be implemented in 11 member states, and while that would not include the UK, the measure could disproportionately affect London.
Anthony Browne, chief executive, British Bankers’ Association:
Such a tax could have reverberations that will last decades. By the European Commission’s own admission, FTT would see economic output fall. In a separate report Oxera, a consultancy, found that for each €1 raised through the FTT, the European economy would lose €2 of output. And the FTT will disproportionately damage London, where two-thirds of euro-denominated trading is transacted.