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European court throws out Britain's bid to prevent financial trading tax

Published on Apr 30, 2014 7:38 PM

BRUSSELS/LONDON (REUTERS) - Britain's legal challenge to a financial transactions tax was rejected by Europe's highest court, dealing another blow to attempts to shield London's financial centre from the influence of Brussels.

Wednesday's ruling throws out the legal action intended to prevent a group of 11 countries, including Germany and France, from introducing a trading tax, and was seized on by critics as evidence of the British government's impotence in fighting its corner in Europe.

Britain, where financial services account for a tenth of the economy, making the sector one of the country's biggest tax generators, had argued that trading in London would be affected, even though it would be outside the zone of a tax that is anyway likely to be scaled back.

The tax, intended as a way of clawing back some of the taxpayer cash paid to shore up banks in the 2008-2009 financial crisis, would consist of a small charge on each stock, bond and derivative trade carried out in the 11 countries. But the court noted that much of how the scheme will work remained to be decided and Britain had jumped the gun in challenging it now.

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