US banks warn over planned EU "Tobin tax" Wall Street and US businesses have attacked a proposed eurozone financial transaction tax, claiming it overreaches borders, flouts international treaties and "breaks the bonds that bind our global economy." The European Commission will on Thursday unveil an ambitious plan for an international levy on financial trades to be collected by the eurozone's biggest economies, raising an estimated €30bn-€35bn a year. This tax blueprint, first reported in the Financial Times, includes tough anti-avoidance measures that would catch some trades executed in New York, London, or Hong Kong - even when no eurozone entity is buying or selling the product. While the commission is confident the plan is legally sound, the long arm of the levy has raised the hackles of big investment banks, as well as the UK and Luxembourg, which rejected such an EU wide tax. If France, Germany and nine other states press ahead with a tax based on the commission's expansive proposal, it is likely to be challenged by some EU governments and big financial groups, according to several diplomats and lawyers. A coalition of US business groups - including the US Chamber of Commerce and The Financial Services Forum, the body for the largest US financial groups - have written to the commission objecting to "the unilateral imposition of a global financial transaction tax." "These novel and unilateral theories of tax jurisdiction are both unprecedented and inconsistent with existing norms of international tax law and long standing treaty commitments," the groups argue in a letter to Algirdas Semeta, the EU tax commissioner. There is a high risk that their adoption could lead to ­double and multiple taxation, a deterioration of international tax co-operation and trade ­protectionism. Europe's first "Tobin tax," named after economist James Tobin who mooted a global tax on currency trades in the 1970s, levies 0.1 per cent on stock and bond trades and 0.01 per cent on derivatives transactions involving one financial institution with its headquarters in the tax area, or trading on behalf of a client based in the tax area. As "a last resort," the tax is also applied to transactions based on where the share, bond or exchange traded derivative was issued, even if it takes place in Asia, the US or Britain. Such a levy is dubbed a Tobin tax after economist James Tobin, who mooted a global tax on currency trades in the 1970s. Alexandria Carr, a former UK Treasury lawyer now at law firm Mayer Brown, said those 11 countries moving ahead under so-called "enhanced co-operation" are legally bound to respect the rights of member states that do not participate. "If [the] proposal has the expected extraterritorial reach, it would appear to ride roughshod over the competences of the 16 member states who have opted out," she said. Those countries that have expressed interest in a transaction tax include Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia.