EUROPEAN Union plans for a financial transaction tax (FTT) represent a severe threat to the City of London and should be rejected by the government, the House of Lords has said in a report.
The Financial and Economic Affairs committee report warns that the FTT proposed by the European Commission is ‘flawed’ and would force financial institutions to relocate away from the UK and the EU as a whole.
Such a relocation would have a ‘highly damaging’ impact the UK, the report said.
“The government should absolutely not agree to the proposals in their current form. There is huge uncertainty about the impact of any financial taxation proposal on the UK and the government need to redouble their efforts to influence the debate,” Lord Harrison, committee chairman, said.
“Even if the FTT was only adopted by a small group of Member States, there would still be huge implications for the UK, not least because transactions between UK financial institutions and those within the jurisdiction of the FTT would still be liable for the tax,” Harrison added.
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