On Tuesday, Germany, France and nine other euro zone countries got a go-ahead to implement a tax on trading, despite the reservations of financial centres such as Malta, London and Luxembourg that are worried it could lead to a decrease in business in Europe.
Under EU rules, a minimum of nine countries can cooperate on legislation using a process called enhanced cooperation as long as a majority of the EU's 27 countries give their permission. Germany and France decided to push ahead with a smaller group after efforts to impose a tax across the whole EU and later among just the 17 euro zone states foundered.
EU finance ministers gave their approval at a meeting in Brussels, allowing Germany, France and 9 other euro zone countries, namely Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia to pursue a financial transactions tax. The tax could be introduced within months. Malta is staying out because it fears the tax will harm the competitiveness of its financial services centre.
The levy, based on an idea proposed by U.S. economist James Tobin more than 40 years ago, is symbolically important in showing that politicians are getting to grips with the banks blamed for causing the financial crisis.
Although critics say such a tax cannot work properly unless applied world-wide or at least Europe-wide, some countries are already banking on the extra income from next year, which one EU official said could be as much as 35 billion euros annually. Sweden, which tried and abandoned its own such tax, has repeatedly cautioned that the levy would push trading elsewhere.