Sarkozy to meet Merkel as Cameron threatens veto of EU-wide Robin Hood tax

British Prime Minister David Cameron said Sunday that he would veto any attempt to slap a Europe-wide tax on financial transactions. French President Nicolas Sarkozy and German Chancellor Angela Merkel are to meet to discuss the question on Monday.

Reuters

Following Sarkozy’s declaration that France is ready to go it alone with a “Robin Hood” tax, Cameron told BBC TV that the French “should be free to do so”.

But, he said, he would block any attempt to introduce it across the European Union, claiming that “it would cost jobs, it would cost us tax revenue, it would be bad for the whole of Europe” as capital fled to countries that did not have it.

The tax, known as the “Tobin tax” after American economist James Tobin who first proposed it in 1972, would be between 0.05 and one per cent, according to its supporters.

The French financial groups’ organisation, Association Paris Europlace, slammed the go-it-alone plan on Sunday.

“It would inevitably lead to an exodus of banks, insurance companies and management,” it said.

But French housing minister Benoist Apparu declared himself unsurprised by their opposition to being taxed on Sunday and said a bill would probably be discussed by the cabinet in February.

Sarkozy is to meet Merkel in Berlin on Monday ahead of a European summit at the end of the month.

The German chancellor backed the principle of a Europe-wide tax at December’s crisis summit in Brussels, where Cameron vetoed an EU-wide treaty because he feared it might damage the UK’s financial centre, the City of London.

But Friday’s announcement  seems to have taken other governments by surprise.

Governments and EU institutions reacted coolly to Sarkozy's announcement:

• Germany’s position was “unchanged” and it wants “ tax on financial transactions in the European Union”, said government spokesperson Steffen Seibert;
• The European Commission called for a “coherent approach” between member countries in order to achieve “effective results”;
• Italy's Prime Minister Mario Monti declared it “necessary that different European countries don’t go it alone”.

All of Europe’s stock exchanges except London closed in the red on Friday.