German bid to save transactions tax gets cool response
* Germany's Schaeuble says not giving up on trading tax
* Berlin plan for scaled-down tax gets lukewarm reception
By John O'Donnell and Daniel Flynn
BRUSSELS, March 31 (Reuters) - German attempts to win backing for a watered-down tax on financial transactions in Europe received a lukewarm response on Saturday, in the face of opposition from some governments, putting a full-scale levy off the agenda for now.
Berlin has struggled to rally support for a tax on buying and selling shares, bonds and derivatives. At a meeting of EU finance ministers, it made a last-ditch attempt to salvage its prospects, offered to initially limit the tax to equities.
Germany proposed a two-stage approach of advancing towards a broader tax, with the first step being just a levy on company shares, widening it to bonds and derivatives later.
"We said we wouldn't say there could only be one solution but we're making an effort to find common positions and we'll see how we can advance that in the next weeks," Germany's Finance Minister Wolfgang Schaeuble told reporters.
"I'm not giving up the goal of the FTT (Financial Transactions Tax). I'm not ready to say either we'll get that or we'll do nothing."
But others attending the meeting were less optimistic. Denmark, which as the current holder of the EU presidency seeks to broker agreement between countries on issues like these, said it expected little progress in the coming months.
"We will do our best to be able to come back to the issue during our presidency in May or in June but I don't foresee that we can reach very hard conclusions," said Denmark's economics minister Margrethe Vestager.
Much of the momentum for the debate comes from public distrust of banks and similar groups after the financial crisis.
The tents of Occupy Frankfurt, an anti-bank protest movement that sprang up in the shadow of Occupy Wall Street, are still on the lawn outside the European Central Bank in Germany.
Failure to make progress on the issue would be embarrassing for the French and German governments, which have attempted to show leadership in Europe throughout the financial crisis and both pushed for the tax.
So far, the debate about such a tax has centred on a blueprint written by the European Commission for a tax on stock, bond and derivatives trades from 2014 that could raise up to 57 billion euros ($76 billion).
France has already announced it will introduce a 0.1 percent tax on the purchase of listed stock in large French corporations from August. President Nicolas Sarkozy has said he hopes this will set an example for other European nations to follow.
However, Britain has said it will veto any pan-European transactions tax as London, the region's biggest trading centre, would likely be hardest hit by the plan.
Sweden's finance minister Anders Borg called on Saturday for the Commission proposal to be taken off the table.
Germany has said the euro zone is the smallest feasible grouping required for a financial transaction tax to work, but one EU official said its watered-down plan was unlikely to succeed even at this level given tough resistance from Luxembourg and a lukewarm response from the Netherlands.
Political leaders in Germany, which has national elections next year, and France, where two rounds of presidential elections take place in April and May, believe the tax will please voters.
The Commission's proposal is to tax stock and bond trades at the rate of 0.1 percent and derivatives trades at 0.01 percent.
Britain's stamp duty of 0.5 percent on share trades raised almost 3 billion pounds in the financial year to April 2011.
Ministers also discussed regulatory issues, including a contested draft law for credit rating agencies.
Some countries would like the European Commission to abandon the proposal that debt issuers such as corporates rotate the ratings agencies they use to rank creditworthiness. But it was not changed on Saturday, as some diplomats had predicted. (Additional reporting by Annika Breidthardt; editing by Ron Askew)
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