UPDATE 2-Germany secures breakthrough on EU transactions tax
* Eleven EU countries agree to join financial transactions tax plan
* Number exceeds threshold of 9 needed to push ahead with initiative
* European Commission says ready to proceed with legislative proposal
* Unclear how much tax might raise, how it would be spent
* Sweden's Borg warns against "dangerous" tax
LUXEMBOURG, Oct 9 (Reuters) - Eleven euro zone countries agreed on Tuesday to push ahead with a tax on their financial transactions, an initiative that several other EU nations oppose but which has been pushed hard by Germany and France.
The breakthrough was a surprise to many EU diplomats who had thought Germany might fail to convince sufficient countries to join the plan, which has been in the works for two years.
After heavy diplomatic pressure from Berlin overnight, Spain and Italy agreed at a meeting of EU finance ministers in Luxembourg that they would support the measure. Slovakia and Estonia said they would throw their weight behind it too.
That raised to 11 the number of EU countries prepared to push ahead with the proposal, exceeding the threshold of nine required under EU law to move ahead with legislation using a process called "enhanced cooperation".
Once nine of the countries have formally notified the European Commission, the EU executive and the body charged with proposing legislation, of their commitment in writing, the Commission will begin drafting the law.
"Four additional member states intend to join enhanced cooperation, so it means that we arrive to 11 member states," EU Tax Commissioner Algirdas Semeta said. "When we will receive nine or more formal letters, only then the process will start."
As well as Spain, Italy, Estonia and Slovakia, the proposal has already been formally backed by Greece, Portugal, Austria, Slovenia and Belgium as well as Germany and France.
Yet it remains deeply divisive. Within the euro zone, Finland, the Netherlands and Ireland have strong reservations, and outside of the single currency group, Sweden is a vocal opponent of a tax it attempted to impose in the 1980s, only to see much of its trading shift to London at heavy cost.
"We still think that the financial transaction tax is a very dangerous tax," Finance Minister Anders Borg said ahead of the meeting. "It will have a negative impact on growth."
Britain, home to the region's biggest trading centre, has a stamp duty of 0.5 percent on share trades, raising almost 3 billion pounds in the financial year to April 2011. It will not join the scheme and has lobbied Cyprus to stay out as well.
Borg's scepticism was echoed by the Dutch finance minister. "The Netherlands is not in favour of a financial transaction tax," said Jan Kees de Jager. "We are even reluctant about introduction in other countries."
It is not clear how much money the tax will manage to raise or how any revenue generated will be deployed. Germany and France have hinted in recent weeks that it could be used to finance a single budget among euro zone countries, but that is not supported by many others that back an FTT.
The Commission has said that a tax on stocks, bonds and derivatives trades from 2014 could raise up to 57 billion euros a year if applied across all countries.
Imposing the charge on financial deals is symbolically important in showing that policymakers are tackling an industry blamed for triggering economic turmoil. It may prove popular with voters, as Germany prepares for elections next year.
France, which already has a form of transactions tax in place, is also keen to be seen by voters to be taking steps to trim the excesses of the finance industry and to make sure it is providing some capital to pay for any problems it creates.
The Commission's proposal is to tax stock and bond trades at the rate of 0.1 percent and derivatives trades at 0.01 percent.
- Nearly 300 missing after South Korean ferry capsizes: coastguard |
- Separatists fly Russian flag over Ukrainian armored vehicles
- Ocean floor search for missing Malaysia plane cut short again
- Ukraine launches 'gradual' operation, action limited |
- China economic growth slows to 18-month low in first-quarter |