Development aid organisations hailed an agreement, approved by 11 EU countries today (22 January), to set up a financial transactions tax (FTT), and called on the European Commission to follow France's example by allocating 10% of the revenue “to the benefit of the poorest in the world".

EU finance ministers gave the green light for the 11 countries to move forward with a harmonised FTT, opening a tricky debate on how the money should be used.

The countries are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. Under the ‘enhanced cooperation’ procedure, other EU countries can join at any time.

>> Read: Eleven eurozone states back financial transaction tax

Algirdas Šemeta, the EU Commissioner responsible for taxation, hailed the agreement as “a major milestone in global tax history”.

The European Commission now has to submit a proposal on how to allocate the money, with overseas development assistance and heavily indebted eurozone countries in pole position to receive the extra money.

Šemeta said that "the considerable new revenues" the tax will generate "could be used for growth-friendly investment", and to support wider policy commitments such as aid  to poor countries.

It is unclear however how the new revenue, estimated by a German institute at €37 billion per year if raised in the 11 countries, would be spent.

A contribution to EU budget?

France, which is one of the biggest promoters of the new tax, has indicated its openness to allocate up to 10% of this new income to overseas development.

Gaël Veyssière, spokesperson at the French representation to the EU in Brussels, told EurActiv that Paris was open to dedicating part of the tax revenue to the EU budget, "in a form yet to be defined".

French MEP Alain Lamassoure (European People's Party), who chairs the European Parliament's budget committee and has been a leader in promoting the FTT, developed the same idea, saying a common tax should finance common policies.

“The next stage is now to allocate revenue from the tax to finance the EU budget. It is an emergency to relieve national budgets burdened by the crisis, at a time when they continue through national contributions to fund almost all of the EU budget,” Lamassoure said.

In the European Parliament, the Green/EFA group, called on the Commission to table proposals without delay on how the FTT should work. Revenues from the FTT could play an important role as part of a system of own resources for the EU budget, notably for climate and development aid, said Danish MEP Emilie Turunen, the economic affairs spokesperson for the Greens.

ONE, a global advocacy organisation founded by Bono, the frontman of rock band U2, issued a statement welcoming the decision to set up FTT as “a great opportunity to find extra resources for development aid”.

“France is ahead of the game as a percentage of its existing national FTT revenues are already ring-fenced for development," said Eloise Todd, Brussels director of ONE. "Germany’s development minister Dirk Niebel has also spoken in favour of the idea - but his words now need to be turned into actions.  All countries signing up to the EU FTT must ensure the poorest in the world benefit.”