EU court dismisses UK challenge to financial sector tax

Britain's campaign against a proposed European Union tax on financial transactions suffered a blow today, after a the EU's top court ruled its suit against the levy was premature.
The European Court of Justice in Luxembourg found London's opposition to the Financial Transactions Tax (FTT) should not prevent a group of 11 EU member countries from proceeding with plans to implement it.
"The issue can... Not be examined before the introduction of the FTT," the court ruled.
If implemented, the tax would apply to any transaction, anywhere in the world, carried out by a financial entity which is based in one of the EU states which have so far agreed to implement it.

The FTT is supported by the group of 11, led by Germany and France, but is staunchly opposed by Britain, home to one of the world's largest financial markets in London.
When the tax was first proposed in 2011 by the European Commission, the EU's executive, Britain led the opposition and it was vetoed.

The EU members supporting the tax pressed ahead however, invoking "enhanced cooperation," an EU mechanism which allows a group of nine or more countries to move ahead with regulatory measures.
"The Court considers that the two arguments put forward by the United Kingdom are directed at elements of a potential FTT and not at the authorisation to establish enhanced cooperation," the Court ruled, concluding that "those arguments must be rejected and the action must be dismissed."

The European Commission welcomed the ruling, with spokeswoman Emer Traynor saying the Commission had "always been confident the decision for enhanced cooperation on the Financial Transaction Tax was legally sound."
"We hope that today's decision will give added impetus to the 11 member states in their negotiations on the common FTT," Traynor said.
Meanwhile, a UK Treasury spokesperson said the Court's ruling was not all bad news because it suggested Britain would be able to challenge the FTT at a later stage.
"The government is determined to continue to ensure that the interests of countries outside of the single currency but inside the single market are properly protected as the euro area continues to integrate," the spokesperson said.

France and Germany have championed the FTT as a way of making banks and investment houses pay for the excesses which led to the 2008 financial crash and the debt crisis.