(Reuters) – Eleven euro zone countries agreed on Tuesday to press ahead with a disputed tax on financial transactions designed to help pay for the cost of fixing a crisis that has rocked the single currency area.
The initiative, pushed hard by Germany and France but strongly opposed by Britain, Sweden and other free-marketers, gained critical mass at a European Union finance ministers’ meeting in Luxembourg, when more than the required nine states agreed to use a treaty provision to launch the tax.
The so-called “Tobin tax”, first proposed by Nobel-prize winning U.S. economist James Tobin in the 1972 as a way of reducing financial market volatility, has become a political symbol of a widespread desire to make banks, hedge funds and high-frequency traders pay a price for the crisis.
“This is a small step for 11 countries but a giant leap for Europe,” Austria Deputy Finance Minister Andreas Schieder said. “The way is now clear for a just contribution from the banking and financial sector for financing the burdens of the crisis.”
The agreement raised the prospect of a pioneer group of European states for the first time launching a joint tax without the unanimous backing of the 27-nation bloc, a move that may fragment the single market for financial services.
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