EU to examine US-style bank tax

(BRUSSELS) - Europe will examine a Swedish proposal to introduce a Europe-wide tax on banks similar to a new US scheme, in a bid to fix broken public finances and build a buffer against future financial crises.

Spanish Finance Minister Elena Salgado, chairing a Brussels meeting of counterparts from the 27 European Union members, told reporters that the idea was "already on the agenda for an informal meeting" in Madrid in April.

Finance Minister Anders Borg had earlier presented in a letter to peers his plans to impose a bloc-wide levy which he said would "pay for the impact (financial sector) rescue measures have had on our public finances."

Borg said the EU could no longer "accept the situation where the banks are running away from the bill."

He said: "This is something that has been introduced in the United States, and we already have a similar system in Sweden.

"This is a tax, a fee that could bring substantial revenues for dealing with the public finance situation but also to take care of future banking crises."

German Finance Minister Wolfgang Schaeuble expressed interest in such an idea on Monday, while his French counterpart, Christine Lagarde, said she saw merit in "an insurance policy for systemic risks" to the European economy.

Outgoing tax commissioner Laszlo Kovacs deemed the plan "technically feasible" and "politically possible" but warned that a "problem" remained with rules that mean tax matters are reserved for national decision-making across the EU.

"I would not bet a lot of money on the introduction of this new tax," he said.

Borg's idea involves a levy on final balance sheets -- different from a tax on individual transactions as mooted since the 1970s -- that he said would get round the problem of banks moving to more favourable locations.

"You can't move your balance sheet out of the country so it's a much more logical model," he inisted.

He said the Swedish model, introduced in 2009, comes in at 0.036 percent of final balance sheets.

"The advantages are obvious" compared to a transaction or turnover tax, he said. "Smaller liabilities are encouraged as they incur a lower actual fee."

Britain's Chancellor Alistair Darling told The Scotsman newspaper at the weekend that London would not match President Barack Obama's plans to recover "every single dime" taxpayers shelled out to rescue Wall Street.

Economic and Financial Affairs Council (ECOFIN)