Europeans to lobby G20 over bank levy plans

22nd June 2010, Comments 0 comments

Britain, France and Germany said Tuesday they had agreed to introduce levies on banks to make them help pay for global recovery and plan to discuss the plans with G20 colleagues next weekend.

In a joint statement, London, Paris and Berlin said the exact kind of levy would vary according to their different national circumstances but insisted it would leave them on a level playing field.

"The governments of France, the United Kingdom and Germany propose to introduce bank levies based on banks' balance sheets," they said, as Britain's finance minister announced a banking tax from next January.

The action is to ensure banks "make a fair and substantial contribution towards paying for any burdens associated with government interventions to repair the banking system or fund resolution in a financial crisis," it added.

"The United Kingdom bank tax is announced today," the statement said, referring to Osborne's emergency budget, unveiled after Prime Minister David Cameron's Conservatives won elections last month.

It noted that Germany announced a framework for a national bank levy at the end of March "and will present draft legislation in the Cabinet in summer."

France "will present the details of its bank tax in the coming budget," due later this year, it added.

"All three levies will aim to ensure that banks make a fair contribution to reflect the risks they pose to the financial system and wider economy, and to encourage banks to adjust their balance sheets to reduce this risk," it said.

"The specific design of each may differ to reflect our different domestic circumstances and tax systems, but the level of the levy will take into consideration the need to ensure a level playing field."

The statement added that British, French and German leaders "look forward to discussing these proposals further with international partners" at a Group of 20 summit in Canada next weekend.

G20 leaders are set to open a two-day meeting in Toronto on Saturday amid fears the global economy may skid back into recession.

France, Britain, Germany and the United States have publicly urged their G20 partners to adopt a tax, but Russia, China, India, Australia and summit hosts Canada oppose this and no decision is expected this week.

Osborne stressed the responsibilty of banks as he unveiled an emergency budget designed to tackle Britain's mountain of debt and set out plans to raise taxes and slash public spending by 17 billion pounds (25 billion dollars).

"In putting in order the nation's finances, we must remember that this was a crisis that started in the banking sector and the failures of the banks imposed a huge cost on the rest of society," he said.

"So I believe it is fair and it is right that in future banks should make a more appropriate contribution which reflects the many risks that they generate."

Osborne added that, once in place, the levy aimed to generate over two billion pounds in annual revenues.

© 2010 AFP

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