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British MPs urge legal challenge over transaction tax

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(Globalpost/GlobalPost)

LONDON (Reuters) - Britain should go to court to stop plans by 11 euro zone countries to tax financial transactions from 2014 because of its impact on Britain, a panel of MPs said on Wednesday.

The tax, aimed at making banks pay for taxpayer help they received in the financial crisis, will be imposed on stock, bond and derivative trades and apply anywhere in the world if a transaction is based on a financial instrument from the 11 euro zone countries taking part.

The potential impact on London's financial market - the biggest in Europe - is unclear. Some experts say London may even benefit from the tax if trades are shifted out of the euro zone.

But the European Union Committee in the Lords said there was a case for a legal challenge because Britain may be forced to help collect a tax it would not be imposing itself and whose revenues it would not share.

"We exhort you to take urgent legal advice on the case for a legal challenge at the European Court of Justice," the committee's chair, Lord Harrison, said in a letter to UK financial services minister, Greg Clark.

Harrison said the committee was very alarmed that so little attention had been given to the potential impact of a financial transaction tax on non-participating member states like Britain.

"Although the European Commission denies it, it is our view that UK authorities will be under an obligation to collect the tax," Harrison said.

He criticised "complacency" shown by the government and the financial sector over the tax's possible impact on Britain.

The EU failed to get all its member states to back the principle of the tax, leaving 11 countries to push ahead on their own in the hope that others will follow.

(Reporting by Huw Jones; Editing by Tom Pfeiffer)

http://www.globalpost.com/dispatch/news/thomson-reuters/130327/british-mps-urge-legal-challenge-over-transaction-tax