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Italy's Monti supports tax on financial transactions so long as it's on European level
BERLIN (AP) ' Italian Prime Minister Mario Monti said Wednesday he would support a new tax on financial transactions so long as it applies to the European Union as a whole, backing an idea being pushed by Germany and France.
But whereas German Chancellor Angela Merkel and French President Nicolas Sarkozy have indicated it might suffice to apply it to the 17-nation eurozone, Monti said he would rather have the tax applied across the full 27-nation EU. That could make it more difficult to enact because Britain is adamantly against it.
"We are open to supporting this initiative at the EU level," Monti said at a press conference with Merkel during his first visit to Berlin since taking over from Silvio Berlusconi in November.
While the Berlusconi government had rejected such a tax outright, Monti said he was thought it was a good idea, particularly as a means of reducing the tax burden on families.
Sarkozy, who faces an election in April, has said France could even enact the financial transactions tax, called the Tobin tax, unilaterally, but Germany has been more guarded.
Merkel earlier this week after meetings with Sarkozy in Berlin said she could envision adopting it at the eurozone level, but noted that there's no agreement yet on that inside her own governing coalition. She called for clarity by March on how Europe proceeds.
Monti, who studied at Yale with economist James Tobin, who first proposed a financial transactions tax, said his one-time mentor likened the tax's popularity through history to the Loch Ness Monster.
"You see it, it disappears, then reappears," Monti said. "In this phase I think it has more sense than in others given the velocity of financial transactions, which can cause damage, and not just benefits."
Italy has become a key focus in the European financial crisis because of its size, huge debt load and need to borrow heavily in the first quarter. The yield on its 10-year bonds is hovering around the 7 percent level that is widely considered to be a danger mark.
Some economists say the European Central Bank should help Italy more by buying its government bonds on the open market in larger quantities. That would lower Italy's borrowing rates and ease pressure on its finances. But the ECB, along with Germany, resists such as move because it does not want to be seen propping up specific governments.
The ECB will hold its monthly monetary policy meeting on Thursday, but analysts do not expect it to cut interest rates ' which would help a weak economy like Italy's ' nor signal a more aggressive stance in its bond purchases.
Monti's meeting with Merkel is the latest in a series of talks between European leaders. Following her talks Monday with Sarkozy, the German leader met in Berlin on Tuesday evening with International Monetary Fund chief Christine Lagarde. Lagarde was in Paris on Wednesday to speak with Sarkozy.
Merkel and Sarkozy also plan to travel to Italy on Jan. 20 before a European summit at the end of the month.
Kirsten Grieshaber and Nele Mailin Obermueller contributed to this report. Barry reported from Milan.