Germany and nine other European Union nations will press ahead with plans to introduce a financial market transaction tax, following failed attempt for an agreement to levy it across the EU.
The finance ministers of the 27-nation EU, who met in Luxembourg on Friday, came to the conclusion that an agreement to impose the tax across the bloc will not be possible in the foreseeable future, German Finance Minister Wolfgang Schaeuble told the media after the meeting.
Therefore, 10 nations who are willing to cooperate have decided to move forward by taking the necessary steps on the national level, and to ask the European Commission to draw up legislative proposals to introduce the tax.
Besides Germany, the supporters of the tax are Austria, Belgium, France, Portugal, Slovania, Estonia, Greece, Slovakia and Spain. Under the EU rules, the proposed tax can be introduced if at least nine nations support it.
The European Commission estimates that by charging a tax between 0.01 per cent and 0.05 per cent on a broad range of finance market transactions, more than 30 billion euros could be raised annually.
There have been several unsuccessful attempts in the past to reach an agreement to introduce the tax in the EU as well as at the international level.
Its supporters argue that the tax is necessary to stem excessive speculations in the financial market, to reduce volatility and to involve financial institutions in sharing the costs of future financial bailouts.
The plan is vehemently opposed by Britain and Sweden, which fear that it might lead to an exodus of businesses and financial institutions from Europe and endanger growth.
The German cabinet will discuss the proposal to impose a levy on a broad range of financial market transactions and may pass a legislation next week, Schaeuble said.
Even though the majority of EU nations are not in favour of introducing the tax, no one threatened to block the plan. "We heard from no country that such a plan will be blocked."
A commitment by the German government to work for the introduction of a EU-wide finance market transaction tax was one of the conditions for the opposition Social Democratic Party (SPD) and the Green party when then agreed last week to vote for parliamentary ratification of the EU fiscal pact on budgetary discipline.
Chancellor Angela Merkel's centre-right coalition needs the support of the opposition parties to secure a two-third majority for its ratification by the Bundestag, the lower house of parliament, on June 29.
Schaeuble said the government has taken the steps it had promised to the opposition.