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Bid to push finance tax talks just within eurozone: EU

(BRUSSELS) - European finance ministers will seek to open a path during talks in Luxembourg on Thursday towards an inner circle, probably of eurozone-only countries, for launching a tax on financial transactions.

Internal EU documents show that during negotiations among ambassadors, "Germany asked that the discussion focus on possible alternatives that will not include all member states," in other words, getting round rock-solid objections from London.

A tax on financial transactions, long championed by France and seen on the continent as a way to boost EU-wide resources, is vehmently opposed by Britain.

The City of London is home to three quarters of Europe's financial services industry, and Britain has long argued that a tax on the sector would only lead to capital flight to Switzerland or other offshore sites.

According to the spokeswoman for EU taxation commissioner Algirdas Semeta, Emer Traynor, the European Commission would prefer any tax to be levied among all 27 EU states.

Proposed schemes involve tax falling due the minute a transaction involves a London-registered firm, even if the authority demanding payment lies outside Britain.

The difficulty with a provision in the EU treaties called "enhanced cooperation," already used in the area of divorce law and which allows at least one third of those states to press ahead with laws on a prior basis, is that the rules oblige them to do everything possible first to start out with all members on board.

The London government has frequently said it is prepared to receive submissions from EU partners, in so doing dragging out the process over a lengthy period.

As a result, little progress can be anticipated in Luxembourg, despite strong French backing for the German drive.


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