EU leaders mull speculation tax

Brussels - Several European Union leaders spoke up for new taxes on financial transactions on Thursday - but most stressed they weren't keen to go it alone with levies on a financial system that is slowly recovering from the worst economic crisis in decades.

French President Nicolas Sarkozy said the ideal of taxing speculative deals was "making progress".

"This tax is innovative and it's going around the table," he said after EU nations met for talks on global financial reform.

But he said Europe was not going to bring it up at a summit of rich and developing countries later this month because "you cannot talk about everything".

German Chancellor Angela Merkel said there was wide support among the EU's 27 nations for a "sensible" tax on speculation if the United States and other major economies joined in.

"Such a tax could only be implemented internationally," she told reporters after leaders met to talk about global financial reform.

Austrian Chancellor Werner Faymann said he was "personally very much in favour" of a financial market tax and he didn't want to wait for the US to join in.

British Prime Minister Gordon Brown was far cooler.

"It's an issue about practicality as much as everything else," he told reporters. "If one or two countries refuse to adopt a common levy or action or taxation then it makes it very difficult to implement."

Britain is home to Europe's largest financial center, the City of London, and officials have generally been very reluctant to regulate a sector that has pulled in billions of pounds in investments and created thousands of jobs.

The head of Britain's financial regulator signaled a U-turn when he said he backed such a levy last month. Financial Services Authority Chairman Adair Turner told a magazine that the financial sector was "swollen" and needed either to shrink or "apply special taxes to its pre-remuneration profit".

Turner said that he was happy to consider so-called Tobin taxes, charges on foreign exchange transactions that were originally proposed by the economist James Tobin in the 1970s to discourage speculative trading.

Swedish Prime Minister Fredrik Reinfeldt, who sets the EU leaders' agenda because his country holds the rotating EU presidency, was clear that new taxes shouldn't be on the table: "I don't think that's the answer".

- AP