| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

We provide access to live business television and business related videos from: Bloomberg TV; The Wall Street Journal; CNBC and the Financial Times. Click image:

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : International Last Updated: Apr 22, 2010 - 9:00:04 AM


IMF proposes two new taxes on banks to the G-20 to fund future bailouts
By Finfacts Team
Apr 21, 2010 - 6:44:23 AM

Email this article
 Printer friendly page

The IMF (International Monetary Fund) has proposed to the G-20 (Group of Twenty) leading advanced and emerging countries of the world, that banks should pay two taxes: a bank levy - initially at a flat-rate - on a balance sheet value and also a further tax on profits and pay, to fund future bailouts.

In a report circulated Tuesday ahead of this week’s meeting of the G-20 finance ministers (pdf), and leaked to the BCC, the Fund outlined two taxes that the group should consider and warned that international harmonisation would be critical to avoid regulatory arbitrage.

The report says while the net fiscal cost of government interventions in support of the financial system may prove relatively modest, this greatly understates the fiscal exposures during the crisis. Net of amounts recovered so far, the fiscal cost of direct support has averaged 2.7 per cent of GDP (gross national product) for advanced G-20 countries. In those most affected, however, unrecovered costs are on the order of 4–5 per cent of GDP. Amounts pledged, including guarantees and other contingent liabilities, averaged 25 per cent of GDP during the crisis. Furthermore, reflecting to a large extent the effect of the crisis, government debt in advanced G-20 countries is projected to rise by almost 40 per centage points of GDP during 2008–2015.

The IMF proposed that the G-20 countries begin first with a flat tax, a "financial stability contribution," on all institutions for simplicity, but that the rate could then be adjusted to reflect risk. The money raised could be sequestered in a special rescue fund or be added to each country’s general revenue, the report said.

If additional taxation is desired, the Fund recommended a “financial activities tax” on profits above “normal” levels as well as high pay.

“These are important proposals and we welcome them,”said Alistair Darling, UK chancellor. “The recognition that banks should make a contribution to the society in which they operate is right. Any agreement has to be international and that unilateral attempts would simply risk being undermined.”

Insurers, hedge funds and other financial institutions must also pay the taxes, the IMF argues, despite them being less implicated in the recent crisis. If they were not included, activities currently carried out by banks would be reclassified as, for example, insurance or hedge-fund services to escape the levies.

British Prime Minister Gordon Brown last year proposed a so-called "Tobin Tax" - - in 1978, the late James Tobin, Yale economist and Nobel laureate, first proposed the idea of a tax on foreign exchange transactions that would be applied uniformly by all major countries. A tiny amount (less than 0.5%) would be levied on all foreign currency exchange transactions to deter speculation on currency fluctuations - - on financial transactions. Some countries, including Canada, oppose any new bank taxes.

The UK has introduced a levy on bank bonuses; President Obama proposed a special tax on Wall Street banks and both Germany and France also support such a measure.

The G-20 represents about 90 per cent of global GDP, 80 per cent of world trade (including trade within the European Union) as well as two-thirds of the world's population, according to the IMF.

The G-20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the US, plus the European Union, represented by the rotating Council presidency and the European Central Bank. The Managing Director of the International Monetary Fund and the President of the World Bank, plus the chairs of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank, also participate at G-20 meetings.

The IMF report was requested by the G-20 at the Pittsburgh summit last September.

Related Articles
403 Forbidden

Forbidden

Execute access is denied.


© Copyright 2009 by Finfacts.com

Top of Page

International
Latest Headlines
Wednesday Newspaper Review - Irish Business News and International Stories - - September 17, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - September 16, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 15, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 12, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - September 11, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - September 10, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - September 09, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 08, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 05, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - September 04, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 01, 2014
Friday Newspaper Review - Irish Business News and International Stories - - August 29, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - August 28, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - August 27, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - August 26, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - August 20, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - August 19, 2014
Monday Newspaper Review - Irish Business News and International Stories - - August 18, 2014
Friday Newspaper Review - Irish Business News and International Stories - - August 15, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - August 14, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - August 13, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - August 12, 2014
Monday Newspaper Review - Irish Business News and International Stories - - August 11, 2014
Friday Newspaper Review - Irish Business News and International Stories - - August 08, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - August 07, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - July 31, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - July 30, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - July 29, 2014
Monday Newspaper Review - Irish Business News and International Stories - - July 28, 2014
Friday Newspaper Review - Irish Business News and International Stories - - July 25, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - July 23, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - July 22, 2014
Monday Newspaper Review - Irish Business News and International Stories - - July 21, 2014
Friday Newspaper Review - Irish Business News and International Stories - - July 18, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - July 17, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - July 16, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - July 15, 2014
Monday Newspaper Review - Irish Business News and International Stories - - July 14, 2014
Friday Newspaper Review - Irish Business News and International Stories - - July 11, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - July 10, 2014