EU reaches accord on disputed financial transaction tax

(MENAFN- AFP) The EU finance ministers backing a controversial financial market tax, agreed on Tuesday it would come into effect in 2016 at the latest, despite strong opposition by some countries, officials said.

The 11 member states which support the Financial Transaction Tax, led by France and Germany, had reached a consensus that "it should be a step by step approach, a start to tax shares and some derivatives," Austrian Finance Minister Michael Spindelegger said.

"Each step towards full implementation (will be) decided in a manner that takes into consideration" the economic impact and the concerns of other countires who oppose it, Spindelegger told his colleagues.

Britain, home to one of world's biggest financial markets in London, has consistently attacked the tax as harmful to business and counterproductive in that investors will go elsewhere to avoid paying.

Chancellor of the Exchequer George Osborne said that if the tax impacted other European Union countries who have decided not to take part, such as Britain, then they had the right to challenge it and would do so.

Another opponent, Sweden was blunt in its opposition.

"We think the FTT is a very inefficient and costly tax (which) will have a detrimental impact on investment," Finance Minister Anders Borg said as he arrived for the meeting.

"The lack of information on the proposal is a real problem .. we will be very critical of both the process" and the content, he said.

France and Germany won support from nine other EU member states for the FTT which they champion as a way of making banks and investment houses pay for the excesses which led to the 2008 financial crash and the debt crisis.

However, negotiations between the 11 countries have been difficult, making little progress up to now in the face of intense lobbying against the tax.

The FTT would apply to any transaction, anywhere in the world, carried out by a financial entity which is based in one of the 11 EU states.

It could bring in 30-35 billion euros annually, according to European Commission estimates.

The levy is to be introduced under what is known as 'enhanced cooperation,' an EU procedure which allows a minority to go ahead with a proposal if it cannot win majority support.