Tax set for showdown in Luxembourg

[VIENNA] The 10 European Union countries pursuing a financial transaction tax meet in Luxembourg on Monday, trying to break a stalemate on the levy first proposed five years ago.

Austrian Finance Minister Hans Joerg Schelling, who's leading the talks, said last month that there "has to be a decision in October" on the tax. Failing that, Mr Schelling said he'd step down as the group's leader. He also asked the Organization for Economic Cooperation and Development for advice on how to resolve remaining issues with the plan.

Two working groups charged in June with tackling the main sticking points - the treatment of derivatives on sovereign debt and how to make the tax cost-effective - should deliver their reports for the meeting, according to Austrian Finance Ministry spokesman Johannes Frischmann. The OECD's input is also expected to be ready, he said.

The European Commission, the EU's executive arm, first proposed the tax in 2011 to get a "fair contribution" to the cost of the financial crisis. When this plan failed among all 28 EU nations, a smaller group sought a compromise under "enhanced cooperation" rules, which require consensus from at least nine countries. Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table.

BLOOMBERG