UK - The cost of the proposed financial transaction tax (FTT) will indirectly be passed to pension funds, which would bear a "major part of the burden" of any such initiative, a conservative-leaning think tank has warned.

The UK's Centre for Policy Studies' report, 'Time to Bin the Tobin Tax', was heavily critical of the taxation proposals currently under discussion on a European Union level.

It claimed that, even if the UK opposed any legislation, institutions from countries that passed the legislation could still be subject to charges if based in the UK.

The report warned that business would seek to move outside Europe.

"The obvious beneficiaries would be Switzerland, the US and the Asian financial centres, plus, of course, the offshore centres," the report by John Chown said.

Additionally, it warned that shareholders would ultimately shoulder the burden placed on banks.

"UK listed institutions are substantially owned by pension funds, charities and the like, acting on behalf of the general population, and they would bear another major part of the burden," the report said.

It argued that the tax would face legal challenges as it was implemented, no matter how carefully worded any legislation might be.

"In those circumstances, the uncertainty as to which financial institutions might or might not be liable to an FTT could only undermine the prosperity of one of the UK's most important industries," it said.

The European Commission has previously estimated that the so-called Tobin tax - backed by French president Nicolas Sarkozy and German chancellor Angela Merkel - would raise as much as €57bn in funds, which could halve member states' contributions to the Commission's budget.

At the time, the commissioner for financial programming and the budget, Janusz Lewandowski, said it was the right approach to pursue because financial transactions were not subject to VAT.

"Taxing the transactions of all financial institutions at rates as low as 0.01% is only fair," Lewandowski said.

"Furthermore, the estimated revenue the tax would generate by 2020 can only be welcome by cash-strapped governments across the EU."

But the CPS argues that no method of applying such a tax to financial institutions has been found to date.