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EC to create financial transaction tax

Transaction tax

​The European Commission has been told to draft a financial transaction tax that will apply to ten of the European Union's 28 member states.

If introduced, the tax would mean that Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain would all agree on a specific tax rate, Accountancy Age reports.

The idea has been floated by a number of member states since 2011 but has been blocked by the UK and other critics. However, with the UK looking to leave the EU, it's possible that nine members states could agree to it, which would be all that would be needed to introduce it.

Although Britain was not the only country to be opposed to the financial transaction tax, Brexit will be an opportunity for those behind the move to introduce a law that applies only to member states who support it.

It's expected that the European Commission will produce a draft document for such a tax law by the end of the year, and members states will then get the opportunity to vote on whether they want to see it introduced.

Pierre Moscovici, economic and financial affairs, taxation and customs commissioner for the EU, supported the decision, calling it a "great success". He said low tax rates would "preserve the competitiveness of European financial products against those of the UK" Writing in his blog, Mr Moscovici explained that many of ŧhe main technical options had been resolved and that a political agreement on the issue could be reached by the end of the year.

He also highlighted a couple of keys issues that still needed to be sorted out, such as how to control the cost of collecting such a tax, and the rates of the taxes themselves.

A decision to agree on a financial transaction tax could be a major step for the EU, and show that it's able to come together over these issues. It would also demonstrate how legislation can be passed that will only affect those who support the move, Mr Moscovici added.

It would be a "signal" for sensitive topics, which are often held back by the EU's unanimity rule, that it's still possible to progress.​