EU plans tax on stocks and bonds trading

* Time right for tax as banks pay big bonuses -EU's Semeta

* Proposal may fail in face of opposition from Britain

* Critics say tax would drive trading out of Europe

BRUSSELS, Sept 8 (Reuters) - The European Commission is set to propose a tax on trading shares and bonds according to a senior EU official on Thursday, who said it will proceed with its plans in the eurozone if Britain objects.

The proposal for a 0.1 percent tax, which has drawn criticism from the European Central Bank and others who say it may drive trading out of countries where it applies, could prove impractical to introduce though.

But if EU officials strike a formula to impose the charge without scaring off traders, it could be central to the bloc's bid to tax banking following the global financial crisis.

"Banks are currently able to pay huge bonuses, despite difficulties, and chief executives are receiving huge compensation," Algirdas Semeta, the European commissioner in charge of taxation, told reporters on Thursday.

"It's clear nobody likes to be taxed, but I don't think it's not the right moment," he said, adding that a tax of 0.01 percent would also apply to derivatives, although it was unclear if currencies could be included. "Tentatively, the tax would be tabled in early October."

Semeta has the backing of French President Nicolas Sarkozy and German chancellor Angela Merkel, who last month pledged support for such a tax. Both leaders have seen their popularity flag at home and such a move could help win it back.

Semeta said an opinion poll carried out by the European Commission showed almost two-thirds of Europeans favour taxing financial transactions. In only a handful of countries, including Britain, do a majority of citizens oppose it.

"Financial transaction taxes are an interesting idea, but it remains our position that to avoid relocation of trading, any tax would need to apply in all financial centres," said a British diplomat.

Britain already imposes its own tax on trading shares and its opposition to a new tax is significant, since it is home to the region's biggest financial centre.

"Existing financial transaction regimes such as the stamp duty on share trading in the UK show that an EU or euro area-wide transaction tax is both feasible and will raise substantial revenue," said Sony Kapoor, founder of think tank Re-Define.

"British opposition has more to do with the erosion of a relative advantage. The UK tax already raises more than 5 billion euros every year."

Semeta said his officials were working on a scheme of taxation that would avoid discouraging trading. A German bank doing a deal in London with a Spanish bank, for example, would generate tax bills not in London, but in Spain and Germany.

"We're working on a definition of the tax residence that will mitigate relocation risks," said Semeta.

The European commissioner will travel to Paris on Friday to discuss the issue with Sarkozy, shortly before France chairs meetings of finance ministers in the Group of 20 major economies as well as the G20 leaders' summit in November.

"There is strong support at EU level, although some member states have reserved their position. But somebody has to take the leadership at a global level and we have to discuss at G20-level how to use the revenues from the tax."

(Editing by Elaine Hardcastle)