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Business

'Coalition of the willing' clears transaction tax hurdle

The European Commission has given the go-ahead for ten countries to set up a financial transaction tax. The levy is intended to make banks pay for the financial crisis and to curb excessive financial speculation.

The European Commission said the financial transaction tax (FTT) was given the go-ahead on the basis of  a legal process, known as enhanced cooperation, that requires a minimum of nine countries to be on board for a piece of legislation to be implemented.

The ten countries are Germany, France, Austria, Belgium, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. The EU Commission said they had met all legal conditions after a scrutiny aimed at establishing that the tax would not undermine the workings of the EU single market.

Noting that FTT supported fairness, Commission President Jose Manuel Barroso said the move would ensure that the costs of the crisis were shared by the financial sector rather than shouldered by ordinary citizens.

Barroso said he was delighted to see the ten nations introduce the tax on the basis of a commission proposal, and added that the tax might raise billions of euros for member states in difficult times. "This is about fairness," he said.

Under the tax plan, estimated to deliver 57 billion euros ($74.5 billion) each year, a levy of 0.1 percent is to be slapped on trades in bonds and shares, while deals in derivative products would cost an extra 0.01 percent of the trading volume.

The ten nations decided to forge ahead with the plan in the face of strong opposition from Great Britain and Sweden, which had prevented the tax applying to all 27 member states.

The proposal still needs to be formally approved by a qualified majority of all 27 EU nations, and by the European parliament.

uhe/rc (AFP, dpa, Reuters)