Introducing a European-wide "Tobin tax" would damage its economic competitiveness, a Tory MEP has warned.

The European Parliament today passed a resolution calling for a global financial transaction tax to help stabilise financial markets, but if agreement on this failed to be achieved then Europe should look at going it alone.

Conservatives MEP Dr Kay Swinburne said that the EU must not have tax-raising powers or damage the EU's competitiveness.

"Some kind of levy on financial institutions such as the Obama proposal could bare some merit. However, we must not implement an EU solution to a global problem. To do so would further reduce competitiveness of the European economy, and raise the cost of capital to businesses," said Dr Swinburne.

She also said that the potential for revenues raised to be used on projects outside of protecting the economic future was unwelcome.

"Any financial levy should be to stabilise the financial system, not to raise revenue for unrelated projects," she added.

In a European Parliament statement, it said that any such tax must not harm the banking system's ability to perform its "vital role of financing real economy investments", or discourage the migration of capital.

"Negative repercussions on small businesses and individual investors must be avoided," it added.

The parliament has asked the European Commission to develop a plan for a transaction tax in time for the EU to present a common position to the G20 in June.

Further reading:

BBA pooh-poohs global banking ‘tax’

Treasury moots Tobin Tax on financial transactions

Tobin tax is feasible says Nobel winner