Suggestions that European leaders could resurrect the idea of a financial transaction tax have sent shares in banks and bourses into a spin.A meeting of Germany's Angela Merkel and France's Nicolas Sarkozy yesterday offered little by way of concrete plans to solve the ongoing Eurozone debt crisis.One prospective solution that did emerge was a tax on financial transactions, something that was rejected by the European Union in 2010.It remains unclear who will pay the tax, which could in theory fall on traders, banks or exchanges.The plan sent financial shares south; in Germany Deutsche Boerse AG led declines, down 7% by midday on Wednesday, while Deutsche Bank lost 2.3% before recovering slightly.An e-mailed statement from VOeB, an association which represents German lenders, said they would oppose the plan."Recent regulation means banks are already at their limits with regards to their financial, organisational and personnel abilities," the group said. London Stock Exchange Group lost 4.7% by midday on Wednesday, while in New York NYSE Euronext fell 8.4% by the close of play and the Nasdaq fell 1.2%.All of the UK's major banking groups traded down this morning, with Barclays leading the way, down 3%."Most market participants weren't expecting the meeting to yield any significant progress on the debt crisis but they also weren't expecting the idea of a financial transaction tax to resurface either," Jonathan Sudaria, a dealer at London Capital Group, wrote. Ireland's Finance Minister, Michael Noonan, demanded that any transaction tax apply to all nations in the EU, not just the Eurozone."We can't have a situation where there is a transaction tax in Dublin and there is no transaction tax in London," he said."There would be a lot of objections to it from countries with strong financial services industry participation - Luxembourg, Netherlands, even Paris."
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