European Union finance ministers gave their approval at a meeting in Brussels, allowing the states – Germany and France plus Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia – to pursue the contested scheme.
The levy, based on an idea proposed by U.S. economist James Tobin more than 40 years ago but little considered since, is symbolically important in showing that politicians, who have fumbled their way through five years of financial crisis, are getting to grips with the banks often blamed for causing it.
“This is a major milestone in tax history,” Algirdas Semeta, the European commissioner in charge of tax policy, told reporters, saying the levy could be imposed from January next year if governments agree on its design quickly.
Under EU rules, a minimum of nine countries can cooperate on legislation using a process called enhanced cooperation as long as a majority of the EU’s 27 countries give their permission.
Britain, which has its own duty on the trading of shares, registered its protest by abstaining in the vote, along with Luxembourg, the Czech Republic and Malta, EU officials said.
Following Tuesday’s decision, Semeta said the European Commission would likely put forward a blueprint for the tax in February. Other EU countries could still join the scheme.
Even if Britain and others are out, however, they could still be affected, which is a major concern for London, Europe’s biggest financial centre. If either the buyer or seller is based in one of the countries imposing the tax, the levy can be imposed regardless of where the transaction takes place.
Although critics say such a tax cannot work properly unless applied worldwide or at least Europe-wide, some countries are already banking on the extra income from next year, which one EU official said could be as much as 35 billion euros annually.
Economy Minister Vittorio Grilli said Italy expects revenues of 1 billion euros a year at the national level, while French finance ministry official Benoit Hamon said Paris was among those keen to have the levy in place quickly and hoped other countries would eventually join up.
The Netherlands has expressed an interest in joining the 11, German and French officials said, and non-euro zone countries have also registered interest in signing up.
COURSE OF LEECHES?
Germany and France decided to push ahead with a smaller group after efforts to impose a tax across the whole EU and later among just the 17 euro zone states failed.
Sweden, which experimented with and then abandoned its own transactions tax, has repeatedly cautioned that the levy would push trading elsewhere and found some support for its reservations from Denmark, Portugal, Hungary and Romania on Tuesday, although they did not block the process.
Germany has argued that banks, hedge funds and high-frequency traders should pay for a financial crisis that began in mid-2007 and spread across the world, forcing euro zone countries to bail out peers such as Portugal and Greece.
“The financial sector should share the burden of costs of the financial crisis in an appropriate way,” said German Finance Minister Wolfgang Schaeuble, who was attending a celebration in Berlin marking half a century of post-war partnership between France and Germany. “We have come a good way closer to this goal.
But critics say the levy could open another rift in Europe, where the 17 states using the euro are deepening ties in order to underpin the currency, and there is the growing risk that Britain could even leave the European Union.
Powerful lobby group AFME, which represents some of the world’s largest banks, says the tax will undermine economic growth and the jobs market at a time when Europe is struggling with record unemployment.
Nicolas Veron, a financial market expert at Brussels-based think-tank Bruegel, also believes the scheme, which is likely to see stock and bond trades taxed at a rate of 0.1 percent and derivatives trades at 0.01 percent, is misguided.
“Using a tax on financial transactions to tackle the ills of finance such as high-frequency trading could turn out to the equivalent to a 17th-century course of leeches.”
(Additional reporting by Leigh Thomas, Annika Breidthardt and Francesco Guarascio; Editing by Catherine Evans)
Article source: http://www.nytimes.com/reuters/2013/01/22/business/22reuters-eu-transactionstax.html?partner=rss&emc=rss
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