(adds text agreed by 10 finmins, quotes)
By Francesco Guarascio
LUXEMBOURG, Oct 11 (Reuters) - The European Commission has been given a mandate to draft a law on a financial transaction tax, but work still needs to be done on the proposal by the 10 countries supporting it, EU officials said on Tuesday.
The proposed tax on transactions between financial institutions, put forward by Germany and France in 2012, is seen as a political symbol as much as an effort to correct the excesses blamed for the world’s worst financial crisis for decades.
“On the basis of the Austrian proposals we have reached an agreement in principle,” German Finance Minister Wolfgang Schaeuble said on Tuesday, referring to a text prepared by Austrian finance minister Hans Joerg Schelling.
But the tax, intended for transactions involving shares and derivatives, has been debated ever since, with countries still disagreeing on how to levy it and at what rate.
Late on Monday the finance ministers of the 10 countries considering adopting the financial transaction tax, or FTT, held a meeting in Luxembourg on the sidelines of a regular gathering of euro zone ministers.
They supported the text prepared by Schelling, who also chairs the group.
That text, seen by Reuters, set out general principles. Initially, only shares originated from the participating countries would be taxed but after a transitional period a common tax would be applied to all shares - an idea that may not go down well in Britain, which fears the impact on trades in the City of London.
All derivatives transactions would be taxed except repos, reverse repos and the transactions of public debt managers, the text said.
The text indicates no common tax rates and still misses out important technical details on how to apply the levy, which will all need to be clarified in later talks.
Schaeuble’s French counterpart, Michel Sapin, shared his view that a deal now looked closer than ever.
The Commission will draft in the coming weeks a legislative proposal based on the political deal, with the aim of reaching a final agreement by the end of the year, ministers said.
Several deadlines have been missed over the years regarding the controversial tax, however.
Pierre Moscovici, the EU economics and taxation commissioner, said a deal was near but added: “There is still some analysis to be done.”
The tax was originally proposed for the whole of the European Union, but only Germany, France, Italy, Austria, Belgium, Greece, Portugal, Slovakia, Slovenia and Spain are still considering applying it. (Additional reporting by Frank Siebelt in Luxembourg; Editing by Hugh Lawson)