- POSTED: 06 May 2014 19:30
- UPDATED: 06 May 2014 22:47
The EU finance ministers backing a controversial financial transaction tax agreed on Tuesday to introduce it from 2016 despite strong opposition led by Britain which promised to challenge the levy if it harms its interests.
BRUSSELS: The EU finance ministers backing a controversial financial transaction tax agreed on Tuesday to introduce it from 2016 despite strong opposition led by Britain which promised to challenge the levy if it harms its interests.
The tax was needed, they said, to remedy the failings of the financial markets which plunged the world into crisis in 2008 but sceptics have charged them with political grandstanding ahead of European elections May 22-25.
The member states which support the Financial Transaction Tax, led by France and Germany, had reached a consensus that "it should be a step by step approach, a start to tax shares and some derivatives," Austrian Finance Minister Michael Spindelegger said.
"Each step towards full implementation (will be) decided in a manner that takes into consideration" the economic impact and the concerns of other countries who oppose it, Spindelegger said.
Britain, home to one of world's biggest financial markets in London, has consistently attacked the tax as harmful to business and counterproductive in that investors will go elsewhere to avoid paying.
It took its case to Europe's top court but lost there last month.
Chancellor of the Exchequer George Osborne said that if the tax affected other European Union countries who have decided not to take part, "they are entitled to challenge that and we will challenge that."
Another opponent, Sweden, was equally blunt.
"We think the FTT is a very inefficient and costly tax (which) will have a detrimental impact on investment," Finance Minister Anders Borg said.
"You have found a very small common ground but you have decided you have to come out with something before the elections," Dutch Finance Minister Jeroen Dijsselbloem said, referring to European polls due May 22-25.
"I want to know more, we want to stress the importance of transparency," Dijsselbloem said, adding: "I am a little bit disappointed."
France's Michael Sapin rejected such criticism as misplaced.
"We must remember that if we are in this situation today, it is because we had the financial crisis in 2008," Sapin said.
"Anyone can challenge this but it is important to show that Europe is capable of moving forward and can turn its ideas into action," he added.
His German counterpart Wolfgang Schaeuble conceded the accord was not as far reaching as hoped for but it was still "better than doing nothing."
Other interested parties were unimpressed.
"With the European elections just around the corner, ministers seem more interested in window dressing for voters," Oxfam said.
The accord "does not amount to the ambitious FTT needed to ensure that the financial sector is finally made to pay its fair share of tax."
France and Germany won support from nine other EU member states for the FTT which they championed as a way of making banks and investment houses pay for the excesses which led to the 2008 financial crash and the debt crisis.
However, negotiations have been difficult, making little progress up to now in the face of intense lobbying against the tax.
Tuesday's accord was formally agreed by 10 of the 11 FTT backers which includes Belgium, Italy and Spain. Without a government, Slovenia was not able to sign up.
The FTT is meant to eventually apply to any transaction, anywhere in the world, carried out by a financial entity which is based in one of the 11 EU states.
It could bring in 30-35 billion euros (up to $50 billion) annually, according to European Commission estimates, but analysts say it is likely to fall well short of that, given the compromises needed to put it in place.
The levy is being introduced under what is known as "enhanced cooperation", an EU procedure which allows a minority to go ahead with a proposal if it cannot win majority support.