* Finance ministers allow 11 countries to pursue tax plan
* EU's Semeta says levy could be imposed from January 2014
* Britain, Luxembourg, Czech Republic and Malta object
* Some see tax raising up to 35 billion euros annually
By John O'Donnell and Robin Emmott
BRUSSELS, Jan 22 Eleven euro zone countries won
approval on Tuesday for a tax on financial transactions aimed at
shifting more responsibility for the region's crisis onto banks
despite fears it could drive business out of Europe.
European Union finance ministers gave their approval at a
meeting in Brussels, allowing the states - Germany and France
plus Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece,
Slovakia and Slovenia - to pursue the contested scheme.
The levy, based on an idea proposed by U.S. economist James
Tobin more than 40 years ago but little considered since, is
symbolically important in showing that politicians, who have
fumbled their way through five years of financial crisis, are
getting to grips with the banks often blamed for causing it.
"This is a major milestone in tax history," Algirdas Semeta,
the European commissioner in charge of tax policy, told
reporters, saying the levy could be imposed from January next
year if governments agree on its design quickly.
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.
Britain, which has its own duty on the trading of shares,
registered its protest by abstaining in the vote, along with
Luxembourg, the Czech Republic and Malta, EU officials said.
Following Tuesday's decision, Semeta said the European
Commission would likely put forward a blueprint for the tax in
February. Other EU countries could still join the scheme.
Even if Britain and others are out, however, they could
still be affected, which is a major concern for London, Europe's
biggest financial centre. If either the buyer or seller is based
in one of the countries imposing the tax, the levy can be
imposed regardless of where the transaction takes place.
Although critics say such a tax cannot work properly unless
applied worldwide 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.
Economy Minister Vittorio Grilli said Italy expects revenues
of 1 billion euros a year at the national level, while French
finance ministry official Benoit Hamon said Paris was among
those keen to have the levy in place quickly and hoped other
countries would eventually join up.
The Netherlands has expressed an interest in joining the 11,
German and French officials said, and non-euro zone countries
have also registered interest in signing up.
COURSE OF LEECHES?
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 failed.
Sweden, which experimented with and then abandoned its own
transactions tax, has repeatedly cautioned that the levy would
push trading elsewhere and found some support for its
reservations from Denmark, Portugal, Hungary and Romania on
Tuesday, although they did not block the process.
Germany has argued that banks, hedge funds and
high-frequency traders should pay for a financial crisis that
began in mid-2007 and spread across the world, forcing euro zone
countries to bail out peers such as Portugal and Greece.
"The financial sector should share the burden of costs of
the financial crisis in an appropriate way," said German Finance
Minister Wolfgang Schaeuble, who was attending a celebration in
Berlin marking half a century of post-war partnership between
France and Germany. "We have come a good way closer to this
But critics say the levy could open another rift in Europe,
where the 17 states using the euro are deepening ties in order
to underpin the currency, and there is the growing risk that
Britain could even leave the European Union.
Powerful lobby group AFME, which represents some of the
world's largest banks, says the tax will undermine economic
growth and the jobs market at a time when Europe is struggling
with record unemployment.
Nicolas Veron, a financial market expert at Brussels-based
think-tank Bruegel, also believes the scheme, which is likely to
see stock and bond trades taxed at a rate of 0.1 percent and
derivatives trades at 0.01 percent, is misguided.
"Using a tax on financial transactions to tackle the ills of
finance such as high-frequency trading could turn out to the
equivalent to a 17th-century course of leeches."