WORRIED: Another raid on UK pensioners, this time by the EU[GETTY]The European Court of Justice rejected a legal challenge by Chancellor George Osborne against the proposed financial transaction tax on share and bond deals.
The ruling effectively gave the go-ahead to the levy that City experts fear could wipe £3.6billion from British firms and dramatically shrink private pension pots.
Pensions adviser Dr Ros Altmann said: “There is a danger that the imposition of a tax on every transaction will make pensions smaller.
“Any tax that takes money away from pensions is a danger to all of us. A tax on transactions will mean higher costs for customers.”
Chris Cummings, chief executive of financial services industry campaign group City UK, branded it a “tax on savings” and a “disincentive” to save. Mr Osborne was seeking to halt plans for the tax proposed by 11 eurozone countries including France and Germany and claimed it would breach EU single market rules.
But the Strasbourg-based court, the EU’s highest, dismissed his challenge as “premature” because the tax had not yet been launched.
Critics of the ruling included Tory London mayor Boris Johnson who said rival financial centres would be “licking their lips” at the prospect of taking trade away from the City.
He said: “With London’s economy buoyant and driving the national recovery, the last thing that we need is a barmy tax that will stamp on growth and potentially drive businesses to financial centres outside the EU. Our rivals in the US and Asia will be licking their lips in delight.”
Syed Kamall, leader of the Tory Euro-MPs, described the court ruling as “grave news”. “I believe it calls into question the court’s supposed role as a neutral referee,” he said.
“It does not inspire confidence in the court’s ability to protect UK interests or the proper working of the single market.”
George Osborne in a legal battle [AP]Any tax that takes money away from pensions is a danger to all of us. A tax on transactions will mean higher costs for customers
And UK Independence Party leader Nigel Farage said the decision showed that British business could not be protected from excessive taxation as long as it stays in the EU. He said: “This judgment shows the UK cannot act to protect the UK’s biggest interest. It is impotent and at the mercy of an antagonistic federalist court, the ECJ.
“It shows Cameron’s argument that the UK government can negotiate a better deal for British business from within the EU as a fraud and a farce.
“The only way to protect the UK financial interest is to withdraw from the tax-hungry EU.”
Eurozone leaders believe that the proposed tax would raise billions of pounds for a new emergency bail-out fund to tackle future financial crises.
The Prime Minister and Mr Osborne have insisted that Britain will not sign up to the tax because it is not a member of the eurozone and British taxpayers should not bail it out.
But City chiefs fear Britain will still be hit because the tax will be charged on transactions between firms based in the UK and those in the eurozone.
Mr Cummings said: “Even if Britain is outside the financial transaction tax this will have a negative impact.”
Treasury officials insisted the judgment opened the door to another challenge at a later stage. A Treasury spokesman said: “Today’s decision confirms the UK will be able to challenge the final proposal for a financial transaction tax if it is not in our national interest and undermines the integrity of the single market. We risked not being able to do that if we had not made this challenge.”
Allie Renison, of the Institute of Directors, said: “This will do little to reassure British business that the EU is focused on making Europe competitive.”
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