Cameron's tax arithmetic is wrong, says Brussels

(BRUSSELS) - The European Commission on Thursday shot down figures cited by Britain's Prime Minister David Cameron to argue against a planned financial transaction tax.

Speaking at the World Economic Forum in Davos, Cameron said the Commission's own analysis pointed to the "madness" of a tax that could cost half a million jobs and reduce the EU's economic output by 200 billion euros.

"Such figures are certainly not ones that the Commission would support," Emer Traynor, spokeswoman for taxation affairs, told AFP. She said the study quoted by Cameron was "being read completely out of context."

"When assessing the impact of the FTT in a balanced way, we must also take into account the effect that the new revenues will also have on growth and jobs," she added, estimating the revenue at 57 billion euros a year.

"So, if the revenues are intelligently recycled into the economy, then there would be no negative impact on growth and jobs at all, even in the long term."

She also underlined that in times of austerity, the tax was an "alternative to further increasing other taxes" which would "not lead to relocation of the financial sector."

The Commission put forward a plan to introduce a financial tax last September, partly to fund the European Union budget.

But the idea, which would need unanimous backing by the 27 European Union states, was rejected notably by Britain, Denmark and Sweden.

France and Germany have since said they could go ahead with the idea within the 17-nation eurozone.