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EU likes Tobin tax, but idea needs work

A "Tobin tax" on world financial transactions is an excellent idea but needs work before it could be put into practice, the European Commission's top economic official said on Friday.

"Putting a tax on international financial transactions seems a very sensible idea to me," said economic and monetary affairs commissioner Joaquin Almunia. "I think that for it to be feasible it will need work," he said at a breakfast meeting, adding that in Europe he had heard "many voices in favour".

French Foreign Minister Bernard Kouchner has suggested such a tax to fund development, despite a recent rejection of the idea by finance minister Christine Lagarde.

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Mr. Kouchner told business daily Les Echos on Thursday that British Foreign Minister David Milliband was also in favour of the idea, which would meet with stiff resistance from financiers. Mr. Kouchner said a tax of 0.005 per cent on financial transactions could bring in €20-€30-billion a year for development.

U.S. economist James Tobin was the first to suggest a tax on currency trades as a way of reducing speculation and volatility.

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