Top nations plan bank tax

City A.M. Reporter
THE world’s top nations will back general principles rather than a specific tax to make banks pay for their own bailouts in future, finance ministers and diplomats said yesterday.

The Group of 20 has pledged a string of reforms to financial regulation to avert a rerun of the worst financial crisis since the 1930s that forced governments to use trillions of dollars of taxpayer cash to shore up banks.

G20 finance ministers and central bankers meet in South Korean port city of Busan on Friday and Saturday to find consensus for their leaders to endorse at a summit in Canada later this month.

Some officials are already playing down the chances of a uniform tax on banks, raising doubts about the G20’s ability to agree on tricky issues.

“I don’t think we’re on the verge of a global consensus on bank levy yet,” US Treasury Secretary Timothy Geithner told reporters in Seoul.

There was support in Europe and the US for a levy “but there’s not universal support for that across the G20, at least at this stage. And I don’t think that’s going to change in Korea,” Geithner said.

The International Monetary Fund proposed two bank taxes in April but G20 asked it to refine its ideas after opposition from some countries, such as Canada.

Canada and Brazil say their banks needed no bailouts during the financial crisis triggered by a meltdown in US subprime mortgage market in August 2007, so there was no need for a levy either. Speaking in London, Canadian Prime Minister Stephen Harper said different countries might end up going their separate ways on the issue of a bank levy.