LUXEMBOURG — Top eurozone states agreed Tuesday to launch a controversial financial transactions tax designed to make markets pay for decades of excess.
Eleven governments led by Germany, France, Italy and Spain resuscitated plans for an 'FTT' after plans to launch such a tax across the entire European Union single market were scuttled by Britain in June.
Nine -- one third of the EU's 27 member states -- were needed to trigger rarely-used powers of "enhanced cooperation" allowing pioneers to trailblaze new legislation, such as exists in cross-border divorce law.
Proponents of the tax believe it will help curb the culture of greed that led to the 2008 global financial crisis and ensure the industry which had to bailed out pays its fair share.
EU's tax commissioner Algirdas Semeta said the "new revenue from an under-taxed sector" was "a means of promoting more responsible trading."
However opponents have argued that FTT will dampen growth and only lead to the finance industry to shift to countries where no such tax exists.
Britain had opposed the EU-wide tax on trading on stocks and other financial instruments, fearing that it would see its status as the top European financial market threatened as business moved to New York, Hong Kong or Singapore.
Britain lays claim to some three quarters of the entire European finance industry.
Finance Minister Anders Borg, whose country had poor experience with a FTT in the 1990s, said it would also harm growth.
The FTT "is a proposal which diminishes growth in Europe and increases financing costs for both governments and companies... it would be better that we avoid such a tax," he told the Swedish news agency TT.
The FTT proposal moved forward after four additional states declared their support: Italy, Spain, Slovakia and Estonia.
The joined initial proposers France and Germany, plus Austria, Belgium, Greece, Portugal and Slovenia.
Within the eurozone, Luxembourg -- which houses a sizeable finance sector -- stayed out, alongside Cyprus, Finland, Ireland, Malta and the Netherlands.
While the 11 states can now move forward with elaborating a FTT under enhanced cooperation rules, they will have to overcome their differences on the details, and the other EU states need to give their blessing to the final proposal.
Chief among obstacles to winning a qualified majority vote based on states' relative size and voting weight will be Britain, whose Finance Minister George Osborne indicated he was reserving his backing until a host of questions were cleared up.
"Does it cover equities, derivatives and foreign exchange transactions?" he asked, raising the prospect of lengthy negotiation over the design of the tax.
The European Commission plans for draft legislation to be brought forward in November and France hopes it could be agreed by year-end.
Under the Commission's earlier proposals, a tax of 0.1 percent would have been levied on share and bond trades, and 0.01 percent on other transactions, generating billions of euros in revenue.
Semeta himself highlighted competing visions of the FTT -- notably on whether revenues could go into a putative eurozone central budget mooted by EU President Herman Van Rompuy, or be retained by national treasuries.
France wants revenues to go into the EU's budget, but Germany wants them kept by national governments.
The Commission predicted 57 billion euros in annual revenue for an EU-wide FTT, although the figure here would be nowhere near that scale given the removal of the City of London, Luxembourg and other significant regional finance centres, plus what is sure to be fierce industry lobbying.
The idea of a transactions tax, which has its roots in the 1970s, is championed by those wanting to take back some of the gargantuan profits earned by the banks and to curb the 'greed is good' culture which led to dangerous excesses on the markets.
The deal overshadowed a failure to accelerate grinding discussions on plans for a top-down, EU-wide bank sector supervisor to be set up by year-end.
Eurozone and non-euro states have raised a raft of objections to the plan which would have the European Central Bank take over the role of bank regulator.
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