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EU bank tax plan 'attack on City'

Calls for a new EU tax on banks and finance houses to help repay the cost of the economic crisis have been slammed as an attack on the City of London.

Euro-MPs in Strasbourg voted overwhelmingly for the tax - with proceeds to go straight to the EU budget - in a move designed to plough extra cash into development aid and the fight against climate change.

But the European Commission immediately cautioned against such a move without matching international measures, fearing that an EU-only tax would hit European competitiveness.

Tory MEP Vicky Ford said the proposed "financial transactions tax" would effectively add hugely to the UK's EU budget contributions, while putting a part of national tax policy in the hands of Brussels.

"Whilst it is absolutely right that financial services companies should pay increased taxes, this is not the way to do it," she said.

"A European financial transaction tax would be a tax on the City of London raised by Brussels to fund pet projects. No wonder Labour MEPs are so enthusiastic for it."

She went on: "Labour MEPs want to treble the UK's payments to the EU. That is simply indefensible at a time when they should be seeking to cut what we pay to Brussels. Any financial transaction tax levied must be in concert with at least the G20 countries, with revenues going to national exchequers, not to the EU.

"Imposing a tax of this nature without a global agreement would cause some of our financial services sector to relocate, losing the UK billions in tax revenues and costing untold jobs."

UK Independence Party leader Nigel Farage said the move was "kamikaze economics", adding: "This proposal is to introduce a financial transaction tax just in the EU. However, we live in a global economy and if we become uncompetitive through tax or regulation, people simply move their businesses elsewhere.

"The biggest foreign exchange and financial sector is in the City of London. If I did not know better I would think there was a plot afoot here ... to stop the Anglo-Saxons getting on with their business. If we continue down this route, Britain will lose its biggest industry."

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