By John O'Donnell and Robin Emmott (Business Day/Reuters/Bloomberg)
The following European countries got the go-ahead to implement a tax on trading:Germany, France, Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia.Under EU rules, a minimum of nine countries can co-operate on legislation using a process called enhanced co-operation 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, abstained in the vote, along with Luxembourg, the Czech Republic and Malta
Germany, France and nine other eurozone countries got a go-ahead on Tuesday to implement a tax on trading, despite the reservations of financial centres such as London and Luxembourg that are worried it could drive business out of Europe.
European Union (EU) finance ministers gave their approval at a meeting in Brussels, allowing 11 states to pursue a financial transactions tax. The 11 are Germany, France, Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia.
The levy, based on an idea proposed by US 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 blamed for causing it.
"This is a major milestone in tax history,” Algirdas Semeta, the European commissioner in charge of tax policy, said after ministers backed the scheme.
Under EU rules, a minimum of nine countries can co-operate on legislation using a process called enhanced co-operation 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, abstained in the vote, along with Luxembourg, the Czech Republic and Malta, said an EU official attending the meeting. Following Tuesday’s decision, the European Commission will put forward a new proposal for the tax, which, if agreed on by those states involved, would mean the levy could be introduced within months.
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 €35bn annually.
"We will be able to put it into place quickly,” said Benoit Hamon, a junior minister in the French finance ministry who was at the meeting.
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 eurozone states, foundered. Sweden, which tried and abandoned its own such tax, has repeatedly cautioned that the levy would push trading elsewhere.
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, while at the same time there is the growing risk that Britain could even leave the EU.
Meanwhile, German investor confidence this month increased to its highest in 2½ years, adding to signs that Europe’s largest economy may gather momentum. The ZEW Centre for European Economic Research in Mannheim said on Tuesday its index of investor and analyst expectations, which aims to predict economic developments six months in advance, jumped to 31.5 from 6.9 in December. That is the highest since May 2010 and the biggest gain in 11 months.