City of London slams EU transaction tax

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City of London slams EU transaction tax

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Bank shares fell in London as the British government said it would resist a proposed financial transaction tax.

London would be hardest hit by the levy as the majority of banking transactions in Europe go through the city.

Critics in the British capital are calling the proposal a tax on London.

“The City would argue that a tax specifically on financial transactions won’t solve the problems and won’t avoid any future problems. What they will argue is that it will drive activity, investment and jobs away from London,” said sales trader Will Hedden.

There are also fears that the cost of setting up the scheme could outstrip any revenues raised.

The proposal was unveiled in Strasbourg on Wednesday by the European Commission president José Manuel Barroso.

“It is time for the financial sector to make a contribution back to society,” he told MEPs.

The European Commission insists the project can deliver what it says European citizens expect – to recoup some of the costs of the banking crisis.

It has widespread support, but needs the approval of the UK in order to be implemented across the EU.