A group of 11 European Union countries agreed to introduce a financial transaction tax from 2016 onward, Austrian Finance Minister Michael Spindelegger said Tuesday.
The nations — including economic heavyweights Germany, France, Italy and Spain — will initially tax only the trading of shares and some derivatives, Spindelegger told a meeting of the EU’s 28 finance ministers in Brussels.
European officials started pushing for the tax following the 2008-09 financial crisis, to curb speculation and claw back revenues after government bailouts of banks, but failed to muster the required unanimity for an EU-wide solution.
Britain, which is home to the bloc’s biggest financial hub, the City of London, is strongly opposed to the plan, saying it’s a populist measure that will harm the economy and undermine banks’ global competitiveness.
“It’s not a tax on bankers, it’s a tax on job on investment, on people’s pensions. That’s why the United Kingdom does not want to be a part of it,” U.K. treasury chief George Osborne said.
Spindelegger, who played a leading role in the tax negotiations, said the group of 11 will now work to overcome remaining practical hurdles to finalize the legislation by the end of this year.
The levy’s scope won’t be as broad as supporters initially hoped, but the countries hope to reach agreement on a wider scope later on.
The EU estimates a broad levy encompassing trading in most assets could yield 30 billion euros ($42 billion) in annual tax revenues.
German Finance Minister Wolfgang Schaeuble acknowledged it was “a very difficult matter to get a common position” on the tax, but said the current limited proposal is a good starting point to get the financial sector to contribute.
“To tell people that we are not able to find a way, is not a way to deliver,” Schaeuble insisted.
Britain’s Osborne, meanwhile, denounced the lack of detail of the current tax proposal and threatened Britain would challenge any financial transaction tax if it were to affect also EU economies not participating.
“If they seek to damage jobs and investment across the rest of Europe, then we are entitled to challenge that,” he insisted.
Spain’s Finance Minister Luis de Guindos sought to reassure the countries not participating, saying the group of 11 is “fully aware of the potential consequences” on lending conditions and the wider economy and will carefully draft its legislation.
The EU’s top court last week dismissed a British challenge to the introduction of the tax as premature since the tax has yet to be established. Britain argued it is illegal under EU law since it would affect even countries who don’t sign up to it.
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