Group of 11 EU nations to miss deadline for tax on financial trades

[December 01, 2014]  By Huw Jones

LONDON (Reuters) - Eleven European Union countries are unlikely to agree on a tax on financial transactions by the end of year, an EU document showed on Monday, dealing a political blow to the French and German governments that have pushed it.

The aim is to force banks to pay for the public aid they received in the 2007-09 financial crisis by taxing them on every trade they execute in stocks, bonds and other financial instruments.

Most EU states including Britain, its biggest trading center, have declined to join the group, saying that banks would end up passing the cost to investors.

Without pan-EU backing, the 11 countries have resorted to a rarely used, voluntary EU mechanism, known as "enhanced cooperation", which requires at least nine countries.

The group said in May the countries were determined to find viable solutions by the end of the year, but many technical issues are proving intractable.

The latest document from Italy, which holds the EU presidency, lists the group's disagreements and makes no mention of any compromise proposal, adding that "further work will be required".

Ambassadors for the bloc's members will review the document on Wednesday. An EU official said no compromise would be proposed for agreement, meaning there will be no deal this year.

The proposal has been dubbed the "Robin Hood" tax after the legendary English outlaw who robbed from the rich to give to the poor.

Supporters of the tax, which also include Belgium, Spain, Italy and Portugal, want to tax trades that involve shares and some derivatives from January 2016 at the latest, two years later than planned.

They agree that shares in companies traded on stock markets should be taxed and how unlisted shares, typically held by family members in small companies, could also be taxed.

France has said that taxing shares alone would raise roughly 6 billion euros ($7.5 billion).

There is no agreement over how the levy would be collected, what the geographical reach should be to prevent evasion, or the types of derivatives that should be taxed, the document said.

The Italian document said there was a "solid basis" for further progress and urged Latvia, which takes over the EU presidency in January and is not among the 11 supporters of the tax, to keep the plans high on its political agenda to reach agreement by the final implementation deadline of 2016.

(editing by Jane Baird)

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