‘Robin Hood’ Trading Tax Nudged Forward in Europe
BRUSSELS â€" A hotly contested tax on financial trades took a big step forward on Tuesday when European Union finance ministers allowed a vanguard of member states to proceed with the plan.
Algirdas Semeta, the European tax commissioner.
The so-called Robin Hood tax would apply to trading in stocks, bonds and derivatives. Although the tax would probably be small â€" one-tenth of a percentage point or less on the value of a trade â€" it could earn billions of euros for struggling European governments.
Algirdas Semeta, the European commissioner in charge of tax policy, called the decision “a major milestone in tax history†and said the levy could be imposed starting next year. But deep concerns about how it would work could still lead to delays.
The European Commission, the bloc’s policy-making arm, still needs to draft the final legislation, and the 11 states in favor of the law will have to give their unanimous approval before it becomes law â€" two more than the minimum required for legislation to be drafted.
A significant complication is opposition to the tax by Britain, which has the largest trading hub in Europe in the City of London. But because Britain has decided to stay outside the group of states applying the tax, its resistance would probably not stop the plan from moving ahead.
Among the 27 members of the European Union, the proposal has firm backing from Germany, France and nine other countries. Others might eventually support the idea, which is closely associated with James Tobin, a United States economist and Nobel laureate who suggested a version of it in the 1970s.
Although Britain would not be required to assess the tax, the law could still have an effect on its financial sector by raising the costs of transactions that involve institutions inside the tax zone.
The decision to move forward with the tax was “regrettable and likely to serve as another brake on economic growth,†Richard Middleton, a managing director at the Association for Financial Markets in Europe, an industry group based in London, said on Tuesday.
Backers of the tax originally expected the proceeds to go to humanitarian and environmental causes. But the debt crisis and difficulties in the banking sector have adjusted priorities. Governments are now keener to use the revenue to help prop up shaky banks and finance the European Union’s budget.
If the plan were applied across the entire bloc, it could generate 57 billion euros annually, or about 0.5 percent of European Union’s output, according to the European Commission. But that amount is likely to be significantly less without Britain’s participation.
The next stage is for Mr. Semeta, the European tax commissioner, to propose legislation. He has already suggested a tax of 0.1 percent of the value of stocks and bonds traded, and 0.01 percent of the value of derivatives trades.
One challenge is formulating the law so it does not prompt traders to move outside taxed jurisdictions. Another is deciding who pays the tax when traders in cities like Frankfurt or Paris, where the tax would apply, conduct business with traders in cities like London or New York, where it would not.
Tuesday was the second day of a meeting that began here Monday with a session of the finance ministers from the 17 members of the euro zone, known as the Eurogroup.
On Monday evening, in a nearly unanimous vote, the group elected Jeroen Dijsselbloem, the Dutch finance minister, as its new president.
A version of this article appeared in print on January 23, 2013, on page B6 of the New York edition with the headline: Proposed Tax On Trading Moves Ahead In Euro Zone.
