UK's challenge of FTT had to come 'sooner than later'
EUROPE – The UK's legal challenge of the controversial financial transaction tax (FTT), filed with the European Court of Justice (ECJ) last week, was a means of securing the country's economic position and had to come sooner rather than later, according to one Treasury official.
Speaking at the National Association of Pension Funds (NAPF) yesterday, economic secretary to the Treasury Sajid Javid lamented the negative impact the FTT would have on non-participating EU member states such as the UK, not to mention the consequences for the 11 countries supporting it.
"The FTT would be detrimental to growth throughout Europe," he said. "And at times like this, especially in the euro-zone, which is already facing some challenges, it could make the situation worse."
Javid pointed out that the FTT proposal had not yet been finalised, and said the Treasury still hoped the tax's final version would differ "significantly" from what was currently being proposed.
"At that point, we may not have the same concerns about the impact these proposals could have on UK businesses," he said.
"But we decided to launch this action with the ECJ because we should show quite clearly our position on the FTT and that we want to preserve our position."
Javid went on to say that if the Treasury had waited a few months to launch its legal challenge, critics would question why the UK had not made its voice heard sooner, as had happened in "similar situations in the past".
"What we hope, and what we still believe will be the case, is that the final FTT proposal will take into account our concerns, in which case the matter will solve itself," he said.
Last month, the City of London Corporation claimed in a report that the FTT could raise the cost of UK Gilt issuance by £4bn (€4.7bn) in 2013 alone, ultimately impacting pension funds.
Mark Boleat, policy chairman at the City of London Corporation, said: "Not only would it adversely affect the cost of sovereign debt, but it would also make it more difficult for businesses across the Continent to access funding.
"In reality, the FTT is likely to negatively affect end users such as pension funds, while generating less revenue than estimated due to the behavioural change that would result."