Canada cites bank tax opposition ahead of Harper trip

28th May 2010, Comments 0 comments

Most G20 nations share Canada's aversion to a global bank tax, Canadian officials said Friday ahead of Prime Minister Stephen Harper's trip next week to London and Paris to discuss financial reforms.

There is "general agreement among the G20" that taxpayers should not cover the costs of rescuing failed banks, Harper's spokesman Dimitri Soudas told a press briefing.

Canada claims a levy on banks would ultimately be passed onto consumers through higher banking fees.

As well, several G20 nations "share Canada's position" a bank tax would penalize financial institutions that remained strong and prosperous while several of the world's banks failed, Soudas said.

Most G20 nations, many of which did not experience bank failures during last year's financial crisis, including Canada, are not ready to impose a bank tax, echoed a senior official.

Harper is to travel to London to meet with British Prime Minister David Cameron on June 3. He will be the first foreign leader to be hosted by Cameron at 10 Downing Street.

The two Tory leaders are expected to discuss fiscal consolidation and the agenda for upcoming G8 and G20 summits in Toronto next month, officials said.

The next day, Harper will travel to Paris to also talk about the G8 and G20 agenda with French President Nicolas Sarkozy. "This is a particularly important trip, given that President Sarkozy will be hosting the G8 and G20 in 2011," Soudas commented.

Earlier this month, Harper wrote to G20 leaders to voice his opposition to the bank tax -- an opinion his officials said was "very well received." Canadian ministers also fanned out to Mumbai, Beijing and Washington to raise opposition to the proposal for avoiding another financial crisis.

Attempts to reach international agreement on coordinated bank taxes at last month's G20 and IMF meetings ran aground.

Nations including Canada and Brazil, whose banking sectors emerged largely unscathed from the financial crisis, objected to the plan, favoring higher capital reserve requirements instead.

But the European Union pressed forward this week, unveiling a proposal for its own levy on banks. Monies collected would be used to bail out banks in trouble.

The United States also favors a bank tax.

© 2010 AFP

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