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The doom and gloom-mongers in the British media, as well as some politicians, are claiming that yesterday’s decision by the European Court of Justice (ECJ) rejecting the British government’s challenge to the operation of the Financial Transaction Tax (FTT) spells disaster for the City of London. But in the immortal words of Corporal Jones in the BBC sit-com Dad’s Army “Don’t Panic, Don’t Panic!” For those of you who don’t know, Dad’s Army was a BBC television sitcom broadcast between 1968 and 1977, about the Home Guard during the Second World War and their efforts to hold off the invasion from Europe.

The efforts of the Dad’s Army in repulsing invasion from Europe not only seems appropriate to the present day but by happy co-incidence it has just been announced that the series is to be remade as a film, starring Toby Jones and Bill Nighy.

Anyway, currently the left-wing press, led by the Guardian, are gleefully claiming that George Osborne’s attempt to “go in to bat for bankers” has failed. On the right wing Boris Johnson is rending his garments and bewailing disaster (well he is a classical scholar as well as Mayor of London) and dear old Nigel Farage is claiming that it shows that the EU is moving outside its remit to impose taxes on individual nations which is properly the sole responsibility of each member state.

Of these only Nigel Farage has a point, but to be fair that is pretty much the line that George Osborne and the UK took to the ECJ and despite the press headlines the ECJ have not rejected their argument. Far from it!

The ECJ’s ruling is that as there is as yet no European law in place regarding the FTT, simply a proposal for one to be introduced, a challenge against the FTT itself or even elements of it is premature. However their ruling that the UK’s challenge is premature does not prevent the UK later challenging any European legislation on the FTT eventually adopted by the 11 Member States who intend to charge the tax, under the enhanced cooperation procedure.

It follows that the ECJ’s judgment is not dismissing the UK’s arguments in substance, and indeed these have not even been considered, and those will be able to be argued by the UK once the FTT Directive has been adopted.

Some people are criticising the UK for making a premature challenge but in fact the UK government is hoping that their stated concerns and the acknowledgement that they will be able to challenge the final version of legislation adopted by the European Parliament will influence the policymakers who are drafting the legislation to take on board their concerns. Quite a clever strategy in fact.

This article is based on one also written by James Green and published on the Carraghyn website yesterday.

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Category: Taxation

2 Responses to “European Court Reject British Challenge over Financial Transaction Tax”

  1. Davie says:

    Very amusing post and at the same time very informative. Great writing.

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