The European Union will impose a tax on financial transactions next year, French president Nicolas Sarkozy pledged on Friday after the G20 group of countries was split over the proposal for a global levy.
Sarkozy, who has made the creation of a financial transaction tax (FTT) a priority of France’s chairmanship of the G20, said the idea would be considered by European Union leaders “at the beginning of next year”.
He promised that France would “fight" to make sure that the tax would be in operation by the end of 2012.
He used the closing press briefing at the G20 Summit to reel of a list of countries who he said had shifted in favour of the FTT and would “join France’s fight” over the course of the year.
He said the European Commission, Germany, Spain, Argentina, the African Union, Ethiopia, South Africa and Secretary General of the UN, while he added that Brazil had said “how interested” it was in the proposal.
However Brazil later qualified its support. “I am not against the FTT as long other countries adopt it, but there are countries that are against it,” said Brazilian president Dilma Rousseff. “If it is a global tax we will adopt it.”
The G20 communiqué only acknowledged the initiatives in “some of our countries” to tax the financial sector for various purposes, including a financial transaction tax, “inter alia to support development”, highlighting divisions among member nations.
European Commission President José Manuel Barroso, a strong advocate of the tax, acknowledged on Friday that it had proved a “controversial topic” among G20 leaders at this year’s summit.
Within Europe, the UK and Sweden had indicated they would only support a global FTT, saying that a European tax would lead to an exodus of trading activity into untaxed jurisdictions. Australia, Russia and the US have also rejected the idea.
“Australia is not supporting the FTT,” prime minister Julia Gillard said.
While charity groups have welcomed the French support for the proposal, they have become concerned that the revenue would be used by debt-laden European nations to rebuild their finances rather than devote it to development.
Sarkozy said that part of the motivation of the FTT that it was “absolutely indispensable” that the traders and bankers who had contributed to the “terrible situation” were obliged to “repair the harm that they have caused”.
Paul Cook, advocacy director of Tearfund, a religious charity, welcomed the G20 communiqué as a “serious statement”. But he added: “There should be no confusion.
“Any money generated from such a tax must be focused on tackling poverty and addressing the impacts of climate change and must be additional to current aid commitments.”