Eurozone transaction tax to go ahead
12 October 2012
Posted by: SAIT Technical
By Reuters (Business Day)
LUXEMBOURG — Eleven eurozone countries on Tuesday agreed to press ahead with a disputed tax on financial transactions to help pay the cost of fixing a crisis that has rocked the single-currency area.
The initiative, pushed by Germany and France but opposed by the UK, Sweden and other free-marketeers, gained critical mass at a European Union finance ministers’ meeting in Luxembourg, when more than the required nine states agreed to use a treaty provision to launch the tax.
The "Tobin tax”, first proposed by Nobel Prize-winning US economist James Tobin in 1972 as a way of reducing financial market volatility, has become a symbol of a widespread desire to make banks, hedge funds and high-frequency traders pay a price for the crisis.
"This is a small step for 11 countries but a giant leap for Europe,” Austrian Deputy Finance Minister Andreas Schieder said.
"The way is now clear for a just contribution from the banking and financial sector for financing the burdens of the crisis.”
The European Commission has said a tax on stocks, bonds and derivatives trades from 2014 could raise up to €57bn a year if applied across all countries.
The agreement raised the prospect of a pioneer group of European states launching a joint tax without the unanimous backing of the 27-nation bloc for the first time, a move that could fragment the single market for financial services.