Britain foiled on bank tax

The European Court of Justice in Strasbourg has squashed an early attempt by Britain to prevent the introduction of a financial transaction tax (FTT) in Europe.

Most of the EU's largest economies are pushing for the levy, but Britain is opposed because it fears the tax would devastate its giant financial services sector.

A group of 11 EU nations, including Germany and France, supports the FTT as a way to penalize financial institutions for their role in the collapse of 2008. But even aside of Britain's vigorous lobbying against the measure, there is controversy.

Objection premature

Proponents disagree on what kinds of financial transactions would be subject to tax, or what would be done with the money collected.

That's why the Strasbourg court threw out Britain's challenge. It ruled the plan was still only in a very early stage, and that London's objection was premature. Britain, which also argues that the levy impinges on a nation's right to set its own tax regimes, is free to contest the tax at a future stage though.

France and Germany want to make tangible progress on the FTT before European elections next month. Finance ministers from all nations cooperating on the tax are scheduled to meet next week to renew their efforts on the sidelines of a EU summit.

kpc / hg (dpa, AFP, AP)