Even if Britain declined to join a European Union financial transaction tax, its banks would probably still be subject to it, the European Union's executive warned on Monday. France and Germany are lobbying strongly for the tax, but Britain is opposed, arguing that it would unfairly target the City of London, Europe's biggest financial centre. It is relying on veto powers to block the measure, as EU tax decisions must be unanimous. Given the British position, a eurozone-only tax is being considered. If that went ahead, operations handled by British banks would be covered as long as the buyer or seller in the transaction have links to the eurozone, European Commission officials explained. “It would be in (Britain's) interest to be in” because its banks “would have to give up (their) European client base to avoid the tax,” Emer Traynor, spokeswoman for EU Tax Commissioner Algirdas Semeta, told reporters in Brussels. German Finance Minister Wolfgang Schaeuble said Berlin was still assessing the possibility of a EU-wide tax. Speaking after a meeting in Paris with his French counterpart Francois Baroin Schaeuble said Germany wanted to find a solution “as quickly as possible.” A eurozone-only tax was a possibility, he said, echoing remarks in early January by Chancellor Angela Merkel. But such a move would require overcoming the objections of Germany's Liberals (FDP), the junior coalition partner in Merkel's government, which opposes any tax that exempts some European countries. Traynor said opting out of the scheme would be the worst-case scenario for Britain, as its financial sector would be hit by the tax - at least partially - but authorities in London would get none of the revenue. Her comments echoed those of her boss, published in Monday's Financial Times. Other non-eurozone members like Sweden and Denmark are also sceptical, backing British arguments that the proposed tax would drive financial trading outside the EU, leading to a loss in growth and jobs. When it presented detailed proposals in June, the commission admitted that “in the long run” the tax would shave 0.5 per cent off the EU's gross domestic product.
