CHANCELLOR Alistair Darling yesterday threw his full weight behind a drive for international coordination on the implementation of a global risk tax on banks at an International Monetary Fund meeting next month.
“This must be brought forward quickly, as I will urge international finance ministers in Washington next month,” Darling said as he presented his Budget in the Commons.
The confirmation of the government’s support for a new levy came after the Conservatives went out on a limb by signalling they are willing to press ahead with the tax even without international coordination.
Darling’s affirmation yesterday coincided with the publication of a draft proposal for a bank levy in Germany. German finance minister Wolfgang Schaeuble yesterday said the levy could raise €1bn (£894m).
The German government wants to agree on the proposal at a cabinet meeting next week and to work it by mid-year into a draft law to protect taxpayers from bearing alone the cost of future bank rescues and restructuring.
“The resources collected for this fund will be available for the financing of future restructuring and winding down measures at system relevant banks,” the German draft read. “All German credit institutions will be liable to contribute.”
It remains unclear how long the German charge will be levied on banks, but according to the draft, the finance ministry would continually check if the charge was “bearable”.
If a levy on UK banks is imposed in the same way as a planned US levy of 0.15 per cent annually on total assets, estimates put the total take at up to £3.6bn.
FACTBOX | DARLING’S CONDITIONS FOR A SYSTEMIC TAX ON BANKS
– a tax should be coordinated internationally to minimise competitive distortions. Issues of double-taxation and arbitrage risk will need to be resolved
Boost existing G20 initiatives
– a tax should complement but not replace G20 regulatory initiatives aimed at addressing systemic risk
Boost government coffers
– proceeds should be for national governments to use
For the public good
– a tax should not be seen as an insurance policy to benefit individual institutions, shareholders or creditors.
Complement wider reforms
– a tax must take account of wider regulatory reforms and the strength of economic recovery
– the tax base should be as simple as possible to minimise arbitrage and make it easy for all countries to apply
– a tax should cover all financial institutions that might contribute significantly to systematic risk.