EU top court throws out UK challenge to transactions tax

But since the proposal has not been agreed, the UK case was restricted to challenging the right of the eleven countries, led by France and Germany, to proceed with the bill.

However, in a statement on Wednesday (30 April), the Luxembourg-based court said that "the Court considers that the two arguments put forward by the United Kingdom are directed at elements of a potential FTT and not at the authorisation to establish enhanced cooperation, and consequently those arguments must be rejected and the action must be dismissed."

In response, a UK government statement remarked that the challenge had "always been seen as a precautionary measure designed to eliminated any risk that a later challenge was ruled out of time".

A spokesman for the UK Treasury added that "today's decision confirms the UK will be able to challenge the final proposal for a Financial Transaction Tax if it is not in our national interest and undermines the integrity of the single market. We risked not being able to do that if we had not made this challenge now."

The UK argues that its challenge to the FTT is part of a strategy to ensure that the EU's single market does not become fragmented between the countries in and outside the eurozone.

Critics say that the UK's opposition to the tax is just a ploy to defend "one rather rich square mile," a reference to London's financial quarter.

Campaigns for an EU-level tax on financial transactions grew following the 2008-9 financial crisis. Having initially rejected plans from the European Parliament to propose a tax, EU taxation commissioner Algirdas Semeta drafted legislation for an FTT across the entire EU in 2011.

However, after a handful of countries, both inside and outside the eurozone, vetoed the plan, eleven countries agreed to activate the EU's 'enhanced co-operation' clause in early 2013 which allows a group of countries to proceed.

The proposal currently on the table includes a 0.1 percent levy on bonds and shares and 0.01 percent on derivative products.

France and Germany have led support for the tax, often dubbed by supporters as the 'Robin Hood tax', with policy-makers seeing it as a way to make the financial sector bear some of the costs of the economic crisis and a measure to dampen speculation on the bond and derivative markets.

The commission says that €30-35 billion in revenue would be raised each year in the 11 countries involved, although its impact assessment indicates that the tax could also lead to a 0.3 percent reduction to the EU's GDP.

However, the political impetus behind the tax has stalled in the past year although France and Germany have pledged to reach a broad agreement amongst national civil servants on the proposal before May's European elections.