Merkel would accept Tobin Tax for Eurozone

German Chancellor Angela Merkel told journalists on Monday that she could envisage a financial transaction tax applying only to eurozone countries, though she stressed that not all of her government colleagues favoured such a scenario.   

German Chancellor Angela Merkel and French President Nicolas Sarkozy in Berlin. Reuters/Fabrizio Bensch

She was speaking after the first of a series of meetings among key European leaders to try to prepare ground for a full EU summit at the end of January.

French president Nicolas Sarkozy has pushed the controversial question of the so-called "Tobin" or "Robin Hood tax" up the EU agenda, by announcing on Friday that he is prepared to introduce such a tax in France, even if other EU countries prefer to wait.

Many activists in Western countries have long campaigned for a small tax on financial transactions which would generate income, and compensate for damage caused by financial speculation.

Berlin hopes to build the broadest possible consensus for such a tax.

Any EU-wide tax reforms must be agreed unanimously and Britain is fervently opposed to a Tobin Tax, fearing that it would lead banks and financial institutions to move out of the City of London to countries such as Switzerland or China.

Within France, many in the financial sector are wary of Sarkozy's plan to go it alone with the tax. 

The Association Paris Europlace said such a tax would harm the French economy unless it was implemented across the European Union.