European Union finance ministers on Tuesday gave
their blessing for 11 eurozone countries to unilaterally implement a
financial transaction tax (FTT), bringing the once-controversial
project one step closer to reality.
EU Tax Commissioner Algirdas Semeta called the approval a "major milestone," pledging to draft a proposal within weeks. That plan will have to be adopted only by countries participating in the tax scheme, but all of the EU's 27 nations will be involved in the talks.
This means that "significant negotiations" lay ahead, warned Irish Finance Minister Michael Noonan, whose country currently holds the EU's rotating presidency.
"It's not a totally free field for those who want FTT because ... a tax cannot be put in place which will run counter to the principles or the practice, indeed, of the (EU) single market," he noted.
Britain and Sweden have been particularly vehement in their opposition, with London fearing that the tax - a proposed 0.1 per cent on bonds and shares and 0.01 per cent on derivatives - will hurt its financial hub.
The Czech Republic, Luxembourg and Malta had also indicated that they would abstain from any vote to protest the move, diplomats said.
Critics say that taxing the markets could drive away much-needed investment from Europe and insist that the tax would only work if it was introduced globally, a near-impossible prospect given opposition from the United States.
But supporters of the measure - also known as the Tobin tax after the US economist who first proposed it in the 1970s - argue that the financial sector should pay a levy since past industry policies are widely seen as the root of the global economic crisis.
"It will give European citizens the feeling that we are learning the lessons from the crisis," Benoit Hamon, France's junior minister for the social economy, noted on Tuesday.
France has signed up for the tax, along with the eurozone's three other biggest economies - Germany, Italy and Spain. Joining them are Austria, Belgium, Estonia, Greece, Portugal, Slovakia and Slovenia.
The group represents two-thirds of the EU economy and 90 per cent of the eurozone economy, Semeta noted. He has estimated that a tax in all 27 EU countries would raise 57 billion euros (76 billion dollars) annually; a new estimate for the 11 is in the works, he said.
The group decided to proceed unilaterally after it became clear that an EU-wide or eurozone-wide tax would not pass. It is only the third time the go-it-alone approach, known as enhanced cooperation, has been used in the EU - and the first time ever in the area of taxation.
The Netherlands is also interested in signing up, several officials said. According to Hamon, a group of countries including Denmark, Romania and Hungary asked for the process to remain open so that other nations can sign up at a later point.
Some states are still worried about the tax's impact on their competitiveness, the French minister noted. But Austrian Finance Minister Maria Fekter said she wouldn't be surprised if more countries signed up for the measure after its details are worked out.
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