Bailey McCann, Opalesque New York:
According to a legal opinion posted by Reuters, from a group of EU lawyers, the proposed financial transaction tax is illegal according to the Union's own laws. The EU Council's Legal Service argues that the proposed levy is "not compatible" with European Union treaties because it "infringes upon the taxing competences of non participating Member States." The ruling could be the end of the line for the financial transaction tax without significant amendments.
The levy has been opposed by a number of the EU member states - especially Britain, along with many fund managers and financial firms. According to lawyers with Clifford Chance, there are a number of problems with the proposal as it stands. Specifically, the "enhanced co-operation procedure can only be used where it doesn't create discrimination in trade between Member States or distort competition between them. It seems reasonably clear that the FTT would distort competition between Member States as a whole. A US bank would, for example, be subject to the FTT when transacting with a German client, but not when transacting with (say) a London client."
Attorneys also note that even though countries could, in theory, opt-out of the tax as with other European regulations, the extra......................
To view our full article Click here