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EU 'Robin Hood' tax gets the nod

Oct 23 2012 19:33

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Brussels - The European Commission on Tuesday backed plans by 11 EU nations to launch a hotly contested "Robin Hood" financial transactions tax (FTT) that is tipped to raise billions for the public purse.

After moves to launch the tax across the European Union were scuttled during months of raucous debate by Britain and others, the EU executive proposed that countries in favour, including France, Germany, Italy and Spain, go ahead on their own.

"A core group of member states are keen to move ahead with a common FTT ... And I applaud this," said the European Union's taxation commission Algirdas Semeta.

"I firmly believe that an EU FTT has great benefits to offer ... I also believe that now is the right moment to move ahead with it. Because in difficult times, fairness matters."

Proponents of a transactions tax, which has its roots in the 1970s, believe it will help curb the culture of greed that led to the 2008 global financial crisis and ensure that a bailed out industry pays its fair share.

"This is a once in a generation chance to ease the burden on European citizens," said Oxfam spokesperson Nicolas Mombrial. "Countries which have not signed up should do so or risk finding themselves on the wrong side of history."

While Britain has loudly opposed the introduction of a transactions tax in fear it would hit the City of London, Austria, Belgium, Greece, Portugal, Slovakia and Slovenia have all signed on to the scheme.

Late Tuesday, Estonia became the 11th nation to join the group, Semeta said on Twitter.

The Commission said in a statement that all the legal conditions to impose an FTT had been met, and that it believed the tax would not undermine the workings of the European single market which seeks to ensure a level playing field for all.

"This tax can raise billions of euros of much-needed revenue for member states in these difficult times," said Commission president Jose Manuel Barroso said.

"We need to ensure the costs of the crisis are shared by the financial sector instead of shouldered by ordinary citizens."

The introduction of the FTT by a small group of nations was made possible through rarely-used EU powers of "enhanced cooperation", enabling a minimum of nine nations --one third of the 27 member states - to trailblaze new legislation.

This has been used twice before when the EU-27 failed to reach unanimity, in cross-border divorce law and more recently for the EU patent.

Britain feared taxing trade in stocks and other financial instruments would move business to New York, Hong Kong or Singapore, harming its status as the top European financial market. Britain lays claim to about three quarters of the entire European finance industry.

The commission proposal must yet be formally approved by members of the 27-nation bloc who will not be applying the FTT, and by the European Parliament, before taxation commissioner Semeta can release a detailed proposal on the tax.

Nine months ago he suggested a low EU-wide tax - 0.1% on share and bond trades, 0.01% on other transactions - expected to bring in €57bn a year.

With the group of 11 accounting for two-thirds of Europe's economy, likely revenue from the tax is likely to be substantial.

Within the eurozone, Luxembourg, which houses a sizeable finance sector, has also opted to stay out, alongside Cyprus, Finland, Ireland, Malta and the Netherlands.

A question mark remains over what the 11 nations will agree to do with the proceeds, channel funds into the EU budget as the Commission has proposed, or not.

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