Breakthrough in push for financial transaction tax

Eleven countries led by Germany and France have indicated their willingness to sign up to a financial transaction tax, enabling a group of European Union member states to push ahead with the policy.

With a number of EU countries, including the United Kingdom and Sweden, opposed to the measure, nine member states must sign up for the plan to proceed under the so-called enhanced cooperation procedure. So far seven have formally said they would join the scheme: Germany, France, Belgium, Austria, Slovenia, Portugal and Greece. Another four – Italy, Spain, Estonia and Slovakia – have now said that they will follow suit.

Following a meeting of finance ministers today, tax commissioner Algirdas Semeta said: "We have received a clear – and very welcome – signal that there will be enough member states on board for an EU financial transactions tax." He said the levy was about "fair taxation, smart taxation and a stronger, more coordinated approach to taxing the financial sector".

The European Commission has said that a levy on stock, bond and derivatives trades could raise some €57bn a year if it were implemented across the EU – though with the City of London excluded the revenue from the proposed group of countries would be much smaller.

"I proposed this tax as a source of new revenue from an under-taxed sector, and a means of encouraging more responsible trading. It would also prevent a patchwork of national banks taxes from creating difficulties for businesses in the single market," Semeta said. He added that he hoped for "swift progress" and that he would do "everything possible" to deliver a draft decision to November's meeting of finance ministers.

Emilie Turunen, a Danish member of the Greens/European Free Alliance group in the European Parliament, said it was a "landmark moment" for the EU and the "global movement" for a financial transaction tax. "Ideally, the FTT should apply in the EU as a whole but the task at hand is now to move forward with this coalition of the willing and hopefully convince other member states to join at a later date."

The UK has said it would not join the scheme unless it was implemented globally. Finland, the Netherlands and Ireland have also voiced reservations. Opponents have said the tax will have a negative impact on growth.

Turunen said she hoped that when it drafted the rules for the tax, the commission would take on board the parliament's recommendation that financial institutions based outside the EU would be obliged to pay when trading securities that were originally issued inside the bloc.