Europe's economic heavyweights Germany and France ran into strong resistance Tuesday in their drive to impose a tax on financial transactions, indicating that introducing the levy even in the 17-country eurozone will be difficult.
On top of long-standing opponents like the U.K. and Sweden, which do not use the euro, the proposal also received a lukewarm reaction from traditional allies like the Netherlands, Luxembourg and most smaller eurozone nations.
They fear that introducing even a small tax on transactions in bonds, shares and derivatives could drive banks and other financial institutions out of the European Union if other financial hubs don't follow suit.
Italy meanwhile voiced fears that raising the costs of transactions could hurt banks at a time they are already under severe pressure and even drive up countries' borrowing costs as their bonds would be traded less on the open market.
EU finance ministers on Tuesday for the first time debated a proposal from the European Commission, the EU's executive, of a small levy on financial transactions, which the Commission says could raise as much as euro57 billion ($78 billion).
While all 27 EU countries backed the principle that the financial sector should share the burden of paying for the financial crisis, there is little, to no support, for a transaction tax in other financial centers such as the U.S., China, or Singapore.
"If we could agree a financial transaction tax globally that would be a good thing but that's not going to happen," George Osborne, the British finance minister, said.
Osborne also warned that the cost of the tax would ultimately be borne by firms' clients such as citizens investing in pension funds and banks' customers.
Others meanwhile argued that Europe, or even the eurozone, could not wait for the rest of the world to get on board.
"That's just an excuse for doing nothing," said German Finance Minister Wolfgang Schaeuble. "We will wait 20 years before doing anything if we wait for the last island on this planet."
Another sparring point is what the money raised by the tax should be used for. The Commission wants to bolster the EU's own budget, while Germany and France hope to use it to plug their own funding gaps, with some small proportion going to fund development aid.
"The same money is being spent four times over," Osborne told his colleagues.