More than 70% of cash raised by a tax on financial transactions proposed by the European Commission (EC) would come from the UK, a House of Lords committee has warned.
The Lords EU Committee slammed the financial transaction tax (FTT) scheme and called for the EC to show financial restraint to reflect the austerity being experienced in member states.
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The European Union's (EU) budget should rise by no more than inflation in the years to the end of this decade, said the cross-party committee in a report.
Peers also said spending in areas such as the Common Agricultural Policy (CAP) should be cut, to allow funds to be transferred to measures to stimulate economic growth such as the Creative Europe budget to support the creative and cultural sectors.
Proposals for a Europe-wide FTT have been rejected by Prime Minister David Cameron, who says the UK would only join such a levy if it was imposed globally. But some other EU leaders have shown an interest, including France's Nicolas Sarkozy, who has said he will introduce it if he wins Sunday's presidential election.
The Lords committee report said the EC had "failed to make a case for the tax" as a means of funding its next seven-year budget, to run from 2014-2020. If it were introduced, the UK could account for 71% of revenue raised because its financial sector far outweighs those in other EU nations, said peers.
The UK Government has also condemned as "completely unrealistic" the seven-year-budget proposed by the Commission last June and currently under negotiation in Brussels.
The Commission says its plans will give the EU an average annual budget over the seven years from 2014 of £125 billion a year, amounting to 1% of the combined GDP of the 27 member states. But the Treasury says it amounts to an 11% increase and would add £10 billion to the UK's contributions to the Brussels coffers over the period.
The report by peers states that the EU budget "should not grow in real terms between 2014 and 2020". It also said there should be no question of Britain losing its annual budget rebate without fundamental reform of the CAP.
Committee chairman Lord Roper said the seven-year budget for 2014-20 "will dictate much of what the EU does for the next decade". He added: "Given the euro area crisis, it is vital that the EU gets this right. We strongly oppose the Commission's proposals to raise money in new ways and to change the rebate system, which only distract from the need to really address the size and priorities of EU spending."
Last week the Centre for Policy Studies think tank claimed French and German plans to introduce a Financial Transaction Tax - also known as an FTT or "Tobin Tax" - would damage Britain's economy, even though the UK won't be forced to levy the tax on its own banks