27th January 2012
Angela Merkel made the need to introduce the Financial Transaction Tax central to her speech at Davos earlier this week. She said that the introduction of the tax, more commonly known as the Tobin Tax was an immediate goal. Merkel identified the lack of unanimity in Europe as one of the main reasons that an effective solution to the Euro debt crisis was not in place. This was taken to be a reference to the UK's use of the veto last year preventing the Tobin Tax being imposed across all of the European Union. France and Germany now plan its imposition in as many European countries as possible. Sweden is the only other European country to state definitively that it will not introduce the tax.
There is likely to be opposition to the tax within the French and German parliaments. The argument amongst some parliamentary members, in common with the UK government, is that the Tobin Tax will only work if all countries with major financial markets adopt it. Otherwise transactions will be diverted to countries with no Tobin Tax. The US briefly considered the tax during the height of the financial crisis but has since not supported its introduction.