G20 scraps global tax on banks

THE government has vowed to press ahead with its plan to tax British banks – even though the world’s top finance chiefs have scrapped a universal levy on financial firms.

Speaking after the G20 summit in Korea, chancellor George Osborne said: “We’ll introduce a levy regardless of whether other countries will or will not. It’s legitimate to do so because of the cost to the taxpayer of all the action we have taken and the implicit state support they enjoy.”

At the same meeting, the G20 also ripped up its commitment to fiscal stimulus in light of the Eurozone debt mountain. Members had earlier said removing the support too soon would be dangerous, but changed their minds in the face of a possible second credit crisis.

“Those countries with serious fiscal challenges need to accelerate the pace of consolidation. We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions,” the G20 said in a communique issued after the talks.

Attempts to introduce the global bank levy to fund future bailouts were ditched after opposition from Japan, Canada and Brazil, whose banks needed no public aid during the crisis. But the group said the financial sector should make a “substantial” contribution toward the cost of any rescue.