The European Union's proposed Financial Transaction Tax is "significantly detrimental to the UK's interest" and the British government has been sluggish in its fight against the measure, according to a parliamentary committee.
The House of Lords EU Sub Committee A - Economic and Financial Affairs launched the attack in a report on the FTT. It scolds the European Commission for pushing through the FTT despite having the backing of only 11 out of 28 member states.
It claims the FTT would damage institutions outside of the participating states and leave the UK having to collect tax on behalf of others, such as France and Germany. The report also blasts the Commission for what it says is a failure to meet EU law in its FTT proposal.
"The UK government's diffident approach to the FTT, and its reluctance over several months to take seriously this Committee's arguments and concerns, has been deeply frustrating to witness," said the Lords' report.
"It was only after constant and repeated warnings on our part that the government finally awoke to the serious threat to the UK's, and the broader EU's, interests that an FTT pursued by other member states might present."
Lord Harrison, chairman of the committee, said the panel of lawmakers believe the FTT is "flawed and potentially damaging to the economic well-being of the UK".
"The Commission has a duty to all 28 of its member states equally, and this sort of cavalier approach to legislation risks making losers of us all," he said.
Under the FTT proposal, shares and bonds transactions would be taxed at 0.1% and derivatives at 0.01%. The EU estimates this would generate revenues of €30-35bn a year.
In April, the UK government launched a legal challenge to the Commission's FTT, which is dubbed by proponents as the Robin Hood Tax.
"We're not against financial transaction taxes in principle but we are concerned about the extra-territorial aspects of the Commission's proposal and I think that concern is shared by some other countries," said UK Chancellor George Osborne at the time of the legal action.
A leaked document from EU Council lawyers argues the FTT would be in breach of the 28-member state union's treaties and infringe on the sovereignty of national governments.
They say the FTT "exceeds member states' jurisdiction for taxation under the norms of international customary law", an argument made by the UK government.