* Eleven EU countries agree to join financial transactions
* Number exceeds threshold of 9 needed to push ahead with
* European Commission says ready to proceed with legislative
* Unclear how much tax might raise, how it would be spent
* Sweden's Borg warns against "dangerous" tax
By John O'Donnell and Eva Kuehnen
LUXEMBOURG, Oct 9 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.