* Countries including France, UK, Japan behind plan
* Levy proposed on euro, dollar, sterling, yen transactions
* Could raise up to $35 billion a year for development aid
By John Irish
PARIS, Sept 1 (Reuters) - A group of 60 nations, including France, Britain and Japan, will propose at the U.N. this month that a tax be introduced on international currency transactions to raise funds for development aid, ministers said on Wednesday.
Speaking after a meeting in Paris, French Foreign Minister Bernard Kouchner said the group had agreed a common position for the United Nations Millenium Objectives summit on Sept. 21.
Ministers estimated the tax could raise as much as $35 billion a year for development aid.
"For every 1,000 euros the tax we are suggesting will bring 5 cents," Kouchner told reporters. "It's not a lot, but enough to get things going."
The global aid gap is estimated at $340 billion a year between 2012-2017, including $156 billion for climate change in poor countries and $180 billion for public development.
French President Nicolas Sarkozy has repeatedly supported the idea, but European Union leaders have struggled to convince the United States and other nations to put it on the G20 agenda.
At their last meeting in Toronto the idea was barely discussed, but Sarkozy in August highlighted it as one of his key objectives during France's chair of the G20 from November.
"We know there is reluctance and that's why we have chosen the simplest option," said Spain's Secretary of State for International Co-operation Soraya Rodriguez.
The 60-nation pilot group picked a multi-currency transaction tax as it would be the easiest to implement internationally, she said.
The tax, which would raise an estimated $25 billion to $35 billion a year, would be imposed on transactions in British sterling, euros, dollars and yen and would need the backing of the relevant central banks.
Twelve countries among the 60 are heading up the project and appointed a panel of international experts last year to outline viable options.
The report said the currency tax was the preferred solution, but also gave other options, including a financial sector activity tax, a value-added tax (VAT) on financial services, a broad financial transactions tax and a nationally collected single currency transaction tax.
TOBIN TAX
Nobel prize-winning U.S. economist James Tobin first proposed a small levy on currency trading in 1972 to penalise short-term speculation after the United States abandoned the gold standard and floated the dollar.
His idea found no takers then and lay dormant until the French-based anti-globalisation movement ATTAC (the Association for the Taxation of Financial Transactions for the Aid of Citizens) began campaigning for it in the mid-1990s.
Critics have said that any tax would only be feasible if all the world's main financial centres agreed to levy it. Until now there is no sign that the United States is remotely interested.
"The Americans are extremely important in this, but we are not alone," Kouchner said, adding that the tax could possibly go ahead with just the 60 nations behind it.
Many key details remain to be worked out, such as who would receive and allocate the revenue and for what projects.
Banking and business lobbies, still argue that a levy on financial transactions would drive business offshore, reduce trading volumes and liquidity, hit employment in the financial sector, harm shareholders and slow the world economy. They also say it would be hard to collect and easy to evade
"If the political will is there, it could be done within 2-3 years," Belgium's Development Cooperation Minister Charles Michels told Reuters.
(Reporting by John Irish; editing by Noah Barkin)
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