Germany defiant on 'Robin Hood' tax


German finance minister Wolfgang Schaeuble vowed in an interview published today to push ahead for a financial transaction tax in the European Union in 2012 despite objections from Britain that it could harm London as a global financial centre.

Mr Schaeuble also told Bild am Sonntag newspaper that Europe's sovereign debt crisis would not trigger a financial market crash in 2012.

"I consider the situation to be controllable,"  Mr Schaeuble said referring to the prospects of collapsing markets. "In the EU there's a high degree of determination among the member states to stabilise the situation.

"There will certainly be some surprises and bouts of excitement along the way but we're capable of managing the situation. I'd advise everyone to have a bit more serenity about it all."

Mr Schaeuble (69) added he was confident that investor confidence in the euro zone would return despite all the turmoil related to the sovereign debt crisis in recent years.

"Europe is one of the strongest economic regions in the world and investors want to put their money in places where they can earn profits," he said.

But he added it was essential that highly indebted countries reduce their deficits and debts while improving their competitiveness. He said it was important that a European economic government needed to be established.

Mr Schaeuble said Germany would continue pushing for a financial transaction tax. He said if it cannot be introduced in the EU as a whole then at least in the euro zone.

"In the EU we've agreed to explore the chances of a financial transaction tax in the first months of the new year," he said. "If the hurdles are too high then Germany and France will push for introducing the tax only in the euro zone."

The European Union's executive proposed a bloc-wide tax on financial transactions it said would raise €57 billion a year even though. Banks called the plan nonsense and Britain said it would only support a global levy.

The EU's executive European Commission formally adopted plans in September for a financial transaction tax, which will need unanimous approval from EU states. Under the plan, stock and bond trades would be taxed at the rate of 0.1 per cent, with derivatives at 0.01 per cent.

The EU executive said the tax would be imposed on all transactions in financial instruments between financial firms when at least one party to the trade is based in the bloc.

Mr Schaeuble said he wanted to see the tax now.

"I don't want to wait until such a tax is introduced worldwide. Otherwise we would risk not only the stability of our financial markets... but we would also be endangering the legitimacy in the public eye for the entire system.

"That's why I'm fighting with such determination for a financial transaction tax. It might not be able to stop the ludicrous developments in financial markets but it would at least brake them a bit." Mr Schaeuble said he wanted the tax to slow down the pace of financial transactions and possibly make some speculative business unprofitable.

"The markets are a bit too preoccupied with themselves these days rather than supporting the real economy," he said. "We've got to decelerate the pace of transactions." He said he wants to see Europe out in front with a financial transaction tax.

"I'm very much in favour of Europe leading the way," he said. "That can possibly mean that certain speculative business models are no longer profitable. But that is what we want."