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Italy wants Britain to pay financial transaction tax

ITALIAN Prime Minister Mario Monti on has thrown his support behind a new tax on financial transactions, backing a push by Germany and France, but he wants it to include the UK.

German Chancellor Angela Merkel and French President Nicolas Sarkozy have suggested a tax among the 17-nation euro countries might be enough. Mr Monti said he would rather have it applied across the full 27-nation EU - which would be more difficult because of UK opposition - but did not rule out a eurozone-only deal.

"We are open to supporting this initiative at the EU level," Mr Monti during his first visit to Berlin since taking over from Silvio Berlusconi in November.

While the Berlusconi government had rejected a new financial levy outright, Mr Monti has said he was thought it was a good idea, particularly as a means of reducing the tax burden on families.

Mr Sarkozy, who faces an election in April, has said France could even enact the tax unilaterally, but Germany has been more guarded.

Mrs Merkel earlier this week, after meeting with Mr Sarkozy in Berlin, said there was no agreement yet on a tax inside her own governing coalition. She called for European leaders to clarify their stance on the matter by March.

The tax would be a tiny percentage of the value of a trade - the French government proposed 0.1pc on bonds and shares and 0.01pc on more complex derivatives. Although some countries already have a minimal duty on share trading, the new proposal would not only increase the scope and size of the tax but also siphon off some revenue to Brussels.

There is no final decision yet, however, on what financial instruments would be taxed and whether currency trades - which make up a large slice of worldwide transactions - would be targeted as well.

Monti, who studied at Yale with economist James Tobin, who first proposed the levy, said his one-time mentor likened the tax's popularity through history to the Loch Ness Monster.

"You see it, it disappears, then reappears," Mr Monti said. "In this phase I think it has more sense than in others given the velocity of financial transactions, which can cause damage, and not just benefits."

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