Canada to oppose G20 proposal on global bank tax

Canada will release a formal statement outlining its position on the tax issue. (GETTY IMAGES)

Canada will oppose efforts to create a global bank tax to force financial firms to pay for government intervention, a senior government official said, exposing a major split among G20 leaders ahead of a June summit.

British Prime Minister Gordon Brown said earlier this month he expected the G20 to agree on some form of global bank levy this year.

In response, the Canadian official said on Friday the Conservative government in Ottawa wanted to make clear there was no consensus within the Group of 20 industrialised and emerging powers on such a proposal.

"We are not opposed to countries imposing taxes or a levy domestically, we will not allow it to be imposed on Canada," the official said, speaking on condition of anonymity.

"Our position is clear. We need better regulations, not new taxes, to ensure we don't repeat the global financial crisis," he said.

Finance ministers from the G7 wealthy nations agreed on February 6 to take a closer look at various proposals for making banks cover the cost of bailouts, past and future. The details are sketchy and ideas range from a tax on bank's balance sheets, proposed by US President Barack Obama, to a so-called Tobin tax on financial transactions, which was among the proposals put forth by Brown at the G20 summit in Pittsburgh last year but which has not gained traction in Washington.

It was not immediately clear whether Canada might look more favourably on certain options. An internal memo sent to Conservative legislators, obtained by Reuters, appeared to focus on the Tobin tax.

"Our Conservative government is committed to reducing taxes, not to imposing a global Tobin tax on daily financial services," it said. Canada appeared to be closed to the idea of any tax imposed globally without discrimination, arguing that its domestic banks did not require bailouts thanks to prudent regulations.

"We will oppose the creation of a new global tax or any tax on financial services and transactions," the official said. Canada will push for strengthening financial regulations and better co-ordination between financial regulators. Ottawa will release a formal statement outlining its position, but the official could not say when that would occur.

The G20 agreed last year to give the bank tax idea a closer look and the International Monetary Fund is expected to report back on its study on the matter in April.

 

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