A hotly contested tax on financial trades took a big step forward on Tuesday when European Union finance ministers allowed a vanguard of member states to proceed with the plan.In addition to be a good source of revenue, it creates a large disincentive for short-term speculation by making it more expensive.
The so-called Robin Hood tax would apply to trading in stocks, bonds and derivatives. Although the tax would probably be small — one-tenth of a percentage point or less on the value of a trade — it could earn billions of euros for struggling European governments.
Algirdas Semeta, the European commissioner in charge of tax policy, called the decision “a major milestone in tax history” and said the levy could be imposed starting next year. But deep concerns about how it would work could still lead to delays.
The European Commission, the bloc’s policy-making arm, still needs to draft the final legislation, and the 11 states in favor of the law will have to give their unanimous approval before it becomes law — two more than the minimum required for legislation to be drafted.
A significant complication is opposition to the tax by Britain, which has the largest trading hub in Europe in the City of London. But because Britain has decided to stay outside the group of states applying the tax, its resistance would probably not stop the plan from moving ahead.
Among the 27 members of the European Union, the proposal has firm backing from Germany, France and nine other countries. Others might eventually support the idea, which is closely associated with James Tobin, a United States economist and Nobel laureate who suggested a version of it in the 1970s.
Here is hoping that this becomes a permanent fixture of the world economy.