Europe to go it alone with bank tax after G20 failure

The European Union yesterday pledged to go it alone with a banking levy amid continuing disagreements over agreeing a worldwide plan.

Days after the G20's apparent dumping of the idea as a result of objections from the likes of Canada, Japan and Brazil, the EU said it planned to press ahead with its own measures regardless. Europe's finance ministers finished talks yesterday on the issue and promised to find a way of taxing banks more amid continuing pressure from voters who remain furious at the way banks behaved in the run up to the financial crisis and now face bruising cut-backs to deal with the continent's debt crisis.

But disagreements remain between member states on how the revenues from a future levy should be used. The UK has made clear that revenues from any levy should be made available for general spending, with France taking a similar stance. Germany, however, wants a ring-fenced fund to pay for future bailouts.

That has met with strong opposition from Britain. George Osborne, the Chancellor, has made it clear that he does not believe countries should find themselves paying for the problems of other nations. Britain has not entirely lost hope of persuading the refuseniks to join an international agreement when the G20 meets in Seoul, but this now seems unlikely.

"The EU must be proactive and determined in following that [a tax] up," Spain's Economy Minister, Elena Salgado, said of the G20 move.

On the issue of taxing financial or banking transactions, Josef Proell, Austria's Finance Minister, said: "The G20 was a setback. But not for Europe. We still want this and will continue to advocate it – the sooner the better."

Britain has already signalled that it is willing to go it alone, although it would still prefer an international agreement. Banking organisations have accepted that banks should meet the cost of future bailouts but fears have been expressed that a transaction tax could push trading elsewhere.