'Beautiful' Tobin tax idea not viable: EU's Almunia

(BRUSSELS) - The "beautiful" idea of a global tax on financial deals to cushion against financial shocks or fund aid programmes is effectively a pipedream, a senior European commissioner said on Wednesday.

"For me, the idea of an international tax on financial transactions to finance things the whole world judges necessary is a very good and beautiful idea," economic and monetary affairs commissioner Joaquin Almunia said.

However, he added, "it's not enough just to declare that it is a beautiful idea," stressing at a press conference in Brussels that "if we want to have that, we have to do a lot of work" to get there.

The Spaniard believes conditions for such an idea to take hold "are not easy to find," despite firm German backing for the concept.

"It's extremely difficult to transform this beautiful idea into a viable, operational instrument, which meets the objectives" its supporters seek.

The goals for such a tax on global financial transactions vary depending on who is proposing the idea.

For some, international aid and disaster funding would be the main beneficiary -- for others, providing a cushion against future economic shocks could be the overriding aim.

European leaders left divided after a summit last week when German Chancellor Angela Merkel sought a unified call for such a global levy to be discussed by G20 leaders meeting in Pittsburgh on Thursday and Friday.

Backing came from Austria and France, but Prime Minister Fredrik Reinfeldt of Sweden, the current holder of the European Union's presidency, came out firmly against the idea.

British Prime Minister Gordon Brown expressed the fear that such schemes would be rendered useless by some countries opting out and therefore becoming de facto tax havens.

However, Luxembourg Prime Minister and the head of the eurozone finance minister's Eurogroup, Jean-Claude Juncker, said the issue would be revisited at a later date.

Debate over new versions of the so-called "Tobin Tax" on capital flows has accelerated since Adair Turner, the chairman of Britain's Financial Services Authority, resurrected the idea earlier this year.

Thee tax was originally proposed in 1971 by Nobel Prize laureate James Tobin as a means of reducing speculation in global markets, but Tobin himself later began to doubt his own idea was workable.