BRUSSELS (AP) — A group of 11 European Union countries was given the go-ahead Tuesday to work on the introduction of a tax on financial transactions.
The tax is designed to help pay for the rescue of Europe's banks and discourage risky trading. It would apply to anyone in the 11 countries who makes a bond or share trade or bets on the market using complex financial products called derivatives.
EU Tax Commissioner Algirdas Semeta told reporters after a meeting of the bloc's 27 finance ministers that the decision marked a "major milestone for EU tax policies."
The plan is to use some of the revenue raised from the tax, which could run into tens of billions of euros, to prop up shaky banks. This would help out governments, which have had to pay for bank rescues in the past. Some supporters of the tax have also suggested that part of the revenue could help fund the EU's budget.
"The financial sector must appropriately participate in bearing the cost of the financial crisis," German Finance Minister Wolfgang Schaeuble said in a statement.
Europe's banking industry has been one of the main causes of the euro area's three-year financial crisis. Governments in countries such as Spain and Ireland have had to rescue their banks, which had been brought close to collapse by bad property investments. The rescues caused the governments' levels of debt to rise to dangerously high levels.
The crisis was exacerbated by market speculators using derivatives to make risky bets on how the market in a particular product would move. The European Commission, the EU's executive branch, has proposed that trades in bonds and shares be taxed at 0.1 percent and trades in derivatives at 0.01 percent.
Semeta had no immediate estimate of how much revenue the tax would generate, but he noted that the Commission had previously estimated that such a tax across the 27-nation bloc could yield €57 billion a year. The 11 nations pushing ahead represent about two-thirds of the EU's economy, he said.
Germany, France and nine other nations had initially hoped the tax would be adopted by the entire EU. However, several countries, including Britain, home to the EU's biggest financial hub, refused to endorse the measure amid concerns over its economic impact.
The Confederation of British Industry, a UK business lobby group, criticized Tuesday's decision, saying the tax would be "a drag on the eurozone recovery."
"As the UK's largest single trading partner, a healthy European economy is in everyone's interests so we urge participating member states to reconsider this tax," it added.
The idea of a financial transaction tax was dismissed in the U.S. during the drafting of the Dodd-Frank act, the country's largest financial regulation overhaul since the 1930s.
Last year's deadlock over the tax opened the possibility under EU law, using the so-called enhanced cooperation mechanism, for a group of nine or more nations to go ahead separately. The countries involved are now expected to start working out detailed proposals.
The decision Tuesday cleared a legal hurdle by allowing those nations to push ahead without the backing of all 27 nations, but it did not concern the substance of the proposal.
Ireland's Finance Minister Michael Noonan said the decision was "more about process than about the makeup or the actual relevance of the financial transaction tax." Ireland currently holds the rotating presidency of the EU, and Noonan chaired the meeting.
The 11 countries wanting to create a joint financial transaction tax are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. The Netherlands, where a new government came to power last fall, might also participate at some point.
The meeting of the EU finance ministers came a day after a meeting of the eurogroup, composed of the finance ministers of the 17 EU nations that use the euro currency.
The eurogroup elected Dutch Finance Minister Jeroen Dijsselbloem (DIE-sell-bloom) as its new president, replacing Jean-Claude Juncker, the Luxembourgish Prime Minister who held the job for eight years. The Dutchman, who is 46, has been finance minister only since November.
Dijsselbloem has a full in-tray: The need to negotiate a bailout for Cyprus, pushing forward the introduction of an EU banking union and reconciling deficit reduction in many countries with the need for policies that promote growth.
At their meeting Monday, the eurozone's finance ministers also agreed in principle to extend maturities on some of the debt of Ireland and Portugal, both of whom have received EU bailouts.
That move, echoing a similar concession made to Greece in December, will allow Ireland "to enhance the sustainability of Irish debt and over time will cost us less," Noonan said.
The decision also needed approval by the EU's 27 finance ministers.
The EU's monetary affairs commissioner, Olli Rehn, said both Ireland and Portugal are expected to return to the markets for their financing needs this year.
"A successful return to the markets for these two countries is both in the interest of themselves and certainly in the interest of the entire European Union," Rehn said.
Juergen Baetz can be reached at http://www.twitter.com/jbaetz
Don Melvin can be reached at http://twitter.com/Don_Melvin