COPENHAGEN Germany made a last ditch attempt on Friday to salvage the prospect of a financial transaction tax in Europe by proposing to apply the charge initially only to trading in company stock, but still faced resistance to its plans.
A document circulated at a meeting of EU ministers and obtained by Reuters describes a two-stage approach of advancing towards a "comprehensive financial transaction tax", with the first step being a scaled-down levy.
Germany has struggled to rally support for a tax on buying and selling shares, bonds and derivatives and the offer to initially limit such a tax to equities shows that a full-scale tax is off the agenda for now.
Much of the momentum for the debate comes from public distrust of banks and similar groups after the financial crisis.
The compromise on transaction taxes was put forward by Germany's finance minister Wolfgang Schaeuble at a meeting with his EU peers in Copenhagen.
"This would entail a tax payable on all transactions involving shares of corporations listed on a stock exchange, with the tax levied according to the place where the corporation has its registered office," the document said, adding that negotiations on broadening the tax to cover bonds and derivatives should follow.
The tents of Occupy Frankfurt, an anti-bank protest movement that sprang up in the shadow of Occupy Wall Street, are still on the lawn outside the European Central Bank in Germany.
Failure to make progress on the issue would be embarrassing to the French and German governments, which have attempted to show leadership in Europe throughout the financial crisis.
FRENCH SUPPORT, BRITISH OPPOSITION
"The idea would be to move ahead with a tax on shares among those countries which are willing to impose a stamp duty-like tax, and then have the full tax including derivatives as a second step," said one European official.
A second source said there was still broad opposition to the tax among ministers.
"I think it is quite unlikely that we will see a Europe-wide tax," he said. "A number of countries are very, very firm on their belief that we should not have a Europe-wide financial transaction tax."
So far, the debate about such a tax has centred on a blueprint written by the European Commission for a tax on stock, bond and derivatives trades from 2014 that could raise up to 57 billion euros ($76 billion).
France has already announced it will introduce a 0.1 percent tax on the purchase of listed stock in large French corporations from August. President Nicolas Sarkozy has said he hopes this will set an example for other European nations to follow.
However, Britain has said it will stop any pan-European transactions tax as London, the region's biggest trading centre, would likely be hardest hit by the plan.
Germany has said the euro zone is the smallest feasible grouping required for a financial transaction tax to work, but one EU official said its watered-down plan was unlikely to succeed even at this level given tough resistance from Luxembourg and a lukewarm response from the Netherlands.
"It won't fly in the euro zone either," the official said.
Political leaders in Germany, which has national elections next year, and France, where two rounds of presidential elections take place in April and May, believe the tax will please voters.
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.
Britain's stamp duty of 0.5 percent on share trades raised almost 3 billion pounds in the financial year to April 2011.
Any pan-European plan needs the backing of all 27 member states to become law, although a smaller scheme is possible.
($1 = 0.7509 euros)
(Reporting by John O'Donnell and Dan Flynn; Additional reporting by Robin Emmott and Annika Breidthardt; Editing by Ruth Pitchford)