The Guardian reports that the new UK budget introduces a number of ‘austerity measures‘: The chancellor said the “unavoidable budget” required a VAT rise from 17.5% to 20% next January, higher capital gains tax, a levy on banks, a two-year public sector pay freeze and less generous benefits, but insisted the package was needed to prevent the financial markets from turning on Britain.
In case you’re under the impression a bank tax would be a good thing, consider: Qui bono? Not the populace, which will be expected to absorb the costs. Not the regional banks, many of whom are guiltless of causing the economic crisis, and which will be put under further stress to consolidate and merge with – the mega banks, which blew out the economy with fraudulent derivative instruments and are tied into governments and international central banking institutions. It’s here that we must look, to the expanding global central banks, to really understand who would benefit from such a move.
Related: EU to push for global bank tax at G20 | Tucker Bilderberg 2010 Wrapup: Attack on Iran discussed, World Treasury Dept delayed | G20 to delay tough bank tax regulations | Canada, EU at loggerheads over bank tax | European Central Bank chief: Bank of International Settlements to Rule the Global Economy | Harper calls for global economic governance, lauds G20 as ruling forum | US prepares to push for global capital rules | Flaherty wins delay in decision on global bank tax at interim G20 meeting | Bankers Prepare To Assault Americans With VAT, Transaction Taxes | Global bank tax urged by IMF | Flaherty stands firm against new bank tax | G20 sounds warning over lack of progress on global regulation | Banking reforms urgent, Harper says at G20 sherpas’ meeting | G20 ’sherpas’ meet with IMF, World Bank on Ottawa | Tories hand out $75 billion worth of ’spending restraint’ | Gordon Brown’s plan for global bank tax ‘a step closer’ | Global Bank Insurance Levy Wins Support over Transaction Tax at Davos | Harper urges G20 to follow economic accords | Bankers unite against Barack Obama and Gordon Brown in call for world regulation | IMF warns against retreat from stimulus spending | Banks find gaping loophole in Obama financial reforms | Obama talking tough with banks | EU urged to adopt bank supertax | Obama ponders bank transaction levy to recoup bailout shortfalls | No new stimulus, economy ’stabilized’: Harper | Explosive Leaked Emails Expose Treasury Secretary Geithner’s Deception in ‘Backdoor Bailout’ | Final Copenhagen Text Includes Global Transaction Tax | EU calls for tax on bank transactions | UK: Brown takes campaign for Tobin tax to Commonwealth | UK: Brown proposes global fund to kick-start Copenhagen climate change process | Flaherty, USA say no to global financial tax, yes to continued ’stimulus’ at G20 | Bernanke continues pressing for sweeping new powers for Fed | IMF chief wants global bank tax | G20 nations meet as protests flare on issue of international banking regulation | IMF approves $13bn gold sale to boost lending fund | China Set to Buy $50 Billion in IMF Notes | China calls anew for super-sovereign currency | No one talking about dumping dollar: China minister | China explores buying $50bn in IMF bonds | Chinese economists deem huge holding of US bonds “risky” as Geithner visits | A Bigger, Bolder Role Is Imagined For the IMF | UK PM reveals G20 plan to boost IMF by $1 trillion, hails new world order (again) | UN & IMF Back Agenda For Global Financial Dictatorship | IMF poised to print billions of dollars in ‘global quantitative easing’ | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Globalists Exploit Financial Meltdown In Move Towards One World Currency | World needs new Bretton Woods, says Brown | IMF prescribes state regulation of ‘global financial order’ | Bilderberg Seeks Bank Centralization Agenda | Banks face “new world order,” consolidation: report
Eric Reguly, The Globe and Mail
June 22, 2010
In an attempt to take a bite out of ballooning deficits, Britain, France and Germany announce new levies on their banks
Three of Europe’s biggest economies have thrust the bank levy debate back on to the global agenda despite Canada’s best efforts to kill it, a move that threatens a showdown at the Group of 20 summit.
The effort to slap an additional tax on banks picked up momentum on Tuesday when the British government’s emergency budget announced its intention to proceed with such a move — worth Ãƒâ€šÃ‚Â£2-billion ($3-billion) a year — and France and Germany announced similar proposals.
The issue promises to be a divisive one at the summit this week given the European alliance and the heated opposition to such a levy by countries such as Canada. The idea for such a tax was believed dead after G20 finance ministers met in South Korea earlier and backed away from such a proposal.
It’s yet another challenge for the summit, which will also be grappling with a plea by the United States that world leaders not put the global recovery at risk through widespread cutbacks. European governments are in the midst of such austerity measures to bring their finances under control, while Canada, the host country, has also urged deficit targets.
British Chancellor of the Exchequer George Osborne’s decision to tax total bank liabilities at 0.04 per cent beginning in January, rising to 0.07 per cent a year later, did not rattle investors, who had expected a higher figure. But it was dismissed by some tax accountants as political pandering and by bankers as harmful to an industry that is only just recovering from a crisis that nearly destroyed it.
The British Bankers Association fears British banks and their foreign subsidiaries will be hit with overlapping levies, hurting their ability to compete, as they are introduced in various countries.
“Bank levies need to be co-ordinated internationally: they must not prevent the industry in the U.K. from being able to compete,” the association said. “It is essential that the international banks do not find themselves taxed multiple times for the same thing.”
The British government will consult with banks before the levy is introduced. But in his maiden budget only weeks after the general election, Mr. Osborne gave no hint he would back down.
“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 it is fair and right that in future, banks should make a more appropriate contribution which reflects the many risks that they generate.”
He got moral support from France and Germany, which announced their intention to introduce levies to offset the cost of any future banking crises. In a joint letter, French President Nicolas Sarkozy and German Chancellor Angela Merkel urged the G20 countries to come to an “international agreement to introduce a levy or tax on financial institutions to ensure fair burden-sharing and create incentives designed to contain systemic risks.”
Britain, France and Germany also raised the possibility of bank taxes beyond the levies. Mr. Osborne said Britain will consider taxing bank profits or compensation payouts. The French and German letter mentioned the possibility of “an international agreement on a global financial market tax,” which is code for a tax on financial transactions.
Canada has strongly opposed bank levies and has received support from Russia, China, India and Australia in its effort to use other methods, such as tougher capital requirements, to make banks less prone to accident.
Canada argues that Canadian banks, considered among the healthiest in the world, should not be punished for their success. It also cites moral hazard — the existence of a levy-financed fund to pay for future bank bailouts could, it believes, tempt banks to take higher than usual risks — and it reiterated its opposition after the European announcements.
“As far as Canada and other like-minded countries are concerned, we will not put in place a bank tax,” said Dimitri Soudas, a spokesman for Prime Minister Stephen Harper. “We’re in a different situation, but we are looking for a way that we can find an agreement on the general principles that various countries are trying to pursue when they propose a bank tax.”
The Canadian Bankers Association was also quick to oppose the effort for an international agreement on bank levies. “What is important is stability in the financial sector and good risk management,” the CBA said in a statement. “You don’t get this by imposing a tax on financial institutions.”
While Britain, France and Germany are leading the bank levy charge, any European, let alone international, agreement is far from certain. In Europe, for instance, there is broad disagreement over where the funds from the levy would go. Some countries, such as Sweden and Germany, would like the funds to be “ring fenced,” or set aside for future bailouts and off limits to other government departments. Other European countries think the levy funds should count as general government revenues.
The United States is generally in support of a bank levy, though any such tax would have to be approved by Congress and is unlikely to be included in the new Wall Street reform package. President Barack Obama six months ago proposed a 0.15 per cent levy on bank’s balance sheets (less insured deposits and core capital, known as Tier 1 capital). The levy would raise about $117-billion (U.S.) over 10 years.
The International Monetary Fund intends to present a report on possible bank taxes at the G20 summit. Germany intends to present draft legislation for a bank levy this summer. France said it will “present details of its bank tax in the coming budget,” some time in the autumn.
Source | See also under Economics: The Real Meaning of ‘Economic Austerity’: IMF/World Bank devastation | Gold reclaims its currency status as the global system unravels | EU wants control over member budgets | For G20 leaders, fiscal austerity is the new normal | China moves to allow yuan appreciation | Spain could test the euro to its limit | Gold tops $1260 for new historic high | Russia Will Lead Effort to Found `New World Economic Order,’ Medvedev Says | IMF says Spain taking right steps towards stability | Harper urges austerity, Obama stimulus in urge for G20 to boost economic recovery | Iran Threatens to Stop Western Ships if Subjected to Cargo Inspection | UK may try to stop Iceland joining EU over bank collapse refund | EU to push for global bank tax at G20 | Canada’s water policy needs overhaul: report | Fake Lakes not Required, But $50 Million of G8 ‘Legacy’ Spending Pours into Clement’s Riding | Carney warns of ‘age of austerity’, global outlook ‘getting worse’ | More Than 90 US Banks Miss TARP Payments | France surrenders to Germany’s demand for Euro oversight by central bank | Spanish bailout readied as EU chief warns ‘democracy could disappear’ in debt ridden states | Surprise! That Story About Afghanistan’s $1 Trillion In Commodities Came Out Just Ahead Of Major Mining Auction | Government frustrated by lack of interest in ongoing EU free trade negotiations | US Knowledge of Aghan Mineral Bonanza Confirmed in 2002, 2007 | Obama Using Oil Spill To Push Green Economy Agenda | NGOs meet with G20 sherpas, press for ‘green economy’ and inclusive IMF | Lithium, gold, iron, copper: Massive mineral discovery in Afghanistan could alter the war | Europe embraces the cult of austerity — but at what cost? | First Nations: The Ontario no G20 or G8 leader will see | Japan warns of Greece-like debt crisis | Soros Sees ‘Act II’ of Financial Crisis, Blames ‘Market Fundamentalism’ Again | Tucker Bilderberg 2010 Wrapup: Attack on Iran discussed, World Treasury Dept delayed | UN Security Council imposes fourth round of sanctions on Iran | Liberals admit HST will cost families up to $480 a year | G20 agenda named as “global government” by thinktank, Toronto summit set to sit on hands | Double-dip recession ‘practically inevitable’: UBS | European markets decline for 3rd day | Why Governments Hate Gold | Gold price hits new record as it breaks through $1,250 | Goldman Sachs subpoenaed for failing to cooperate with finance probe | Egypt says Gaza blockade has failed, border crossing opened in wake of aid flotilla assault to stay | Bilderberg Agenda Revealed: Globalists In Crisis, Supportive Of Attack On Iran | Banks Seized by Regulators in Nebraska, Mississippi, Illinois | Bilderberg 2010: Why the protesters are your very best friends | G20 to delay tough bank tax regulations | Geithner speaketh on the globalization of risk as G20 meets in Seoul | Eurozone plan for common bond issue to head off debt crisis |Eurozone plan for common bond issue to head off debt crisis | Underground economy emerges in Ontario in response to HST | Markets finish week with big losses on US employment, Hungarian default fears | Can-EU trade talks look good but face 3 potential sticking points: Spanish envoy | Will Supercorp get off the ground in Ontario? | PM takes pre-summit pitch to Europe | Iran To Dump 45 Billion Euros For Gold Bullion & Dollars | EU plans to create watchdog to curb credit rating agencies | Into the Abyss: The Cycle of Debt Deflation | Global arms spending tops $1.6T | Canada’s economy grows faster than expected | EU trade pact may imperil local control over water | Canadian debt: The $1.4 trillion hole we’re in | Budget watchdog probing G8/G20 summits’ $1-billion price tag | G20 now singing different regulatory tunes | US money supply plunges at 1930s pace as Obama eyes fresh stimulus | Lehman launches court battle against JPMorgan | Global markets rebound as OECD talks up European prospects | UK Coalition ministers and bankers to oppose pan-European bailout fund | New securities watchdog plan allows provinces to opt out | Gold being bought faster than it can be produced | TSX claws back from deep loss, Spain begins bailouts | Obama celebrates banking bill’s passage in Senate | Markets, dollar plunge on EU debt fears | Toronto banks review G20 security after Ottawa RBC fire | Germany’s Merkel Says Euro Is in Danger | Congress blocks indiscriminate IMF aid for Europe | Germany bans naked short-selling | US claims Security Council backing for Iran sanctions | European debt fears batter TSX | Greece links U.S. banks to debt crisis | Agriculture Canada Report: Farming income gets hammered in 2010 | European Council On Foreign Relations: EU Needs To Use Crisis For Greater Power | Sarkozy threatened to quit euro in showdown with Germany: Report | Hedge funds vote threatens EU-US rift | Global markets slide on debt fears | Loonie, TSX slip on euro woes | European Powerbrokers Present Proposal For New Economic And Political Order | Multiple Wall Street banks investigated over links to ratings agencies | Manitoba looks at debit cards for welfare recipients | Power Financial wary of Toronto-based securities regulation push | British face big spending cuts as coalition shows unity on austerity | Europe and America Morally and Financially Bankrupt | Paul bill to audit Federal Reserve passes as one-shot deal | SEC widens probe of Wall Street to include Morgan Stanley | UK Unemployment up to highest level in 15 years | EU wants member countries to co-ordinate budgets | Bid To ‘Storm’ Irish Parliament During Bailout Protest Foiled | Toronto labour, native protesters ready for G20 demonstrations | Gold vaults nearly 3% to record high $1234, BMO sees $1600 horizon | EU deal euphoria fizzles out | Ron Paul: Euro Bailout Will Lead To Currency Collapse | ‘Shock and awe’ euro rescue lifts global markets | Lewenza: Canada-EU deal will affect more than trade | Industry Minister Clement invites input on Canadian digital economy | Western Central Banks back Trillion Dollar European rescue plan, ECB to manage markets | MPs divided on Canada-Colombia trade agreement | Euro zone to regulate hedge funds, vows to fend off ‘wolf pack’ traders at all costs | Free trade with Europe? | Euro crisis goes global as leaders fail to stop the rot | Debt crisis: Panic on Wall Street, stonewalling in Europe | Audit The Fed Push Strengthened By Second Front In Senate | Gold nears record high as stocks plunge | Canada, EU at loggerheads over bank tax | Quebec public-private wind power project generates turbulence | Greek rescue fears hit global stock markets | Goldman Sachs concedes case for restraining the big banks | Shaw buying up CanWest TV assets from Goldman-Sachs | Greece swallows tough medicine in $150B bailout, more spending cuts announced | Greece erupts as men from IMF prepare to wield axe | European Central Bank chief: Bank of International Settlements to Rule the Global Economy | Greece’s near bankruptcy won’t scuttle Canada-EU trade talks: minister | New austerity measures essential, says Greek PM | Harper calls for global economic governance, lauds G20 as ruling forum | HST begins taxing Ontario on Saturday | Canada offers Michigan $550M loan for NASCO link bridge | Goldman execs squirm in face of angry U.S. Senators | Greek debt crisis: Europe feels shockwaves as bailout falters | Standard & Poor’s downgrade Greek credit rating to junk status | Canadian housing market downturn a possibility, says report | Goldman’s Fabrice Tourre: Emails reveal he thought borrowers ‘won’t last long’ | Police State Canada 2010 and the G20 Summit | Big stakes in Canada-Europe trade talks, but little attention | Protesters and police get ready to square off at G20 summit | US prepares to push for global capital rules | World Bank gets $3.5-billion boost, revamps voting structure to make China number 3 | Greek bailout not limited to ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬45bn, Flaherty warns | In revealed e-mails, Goldman chief says we ‘made more than we lost’ by betting against market | Flaherty wins delay in decision on global bank tax at interim G20 meeting | IMF to move quickly on Greek request for loan | Greek PM calls for EU bailout loans | Unconstitutional? Ontario government slips another new energy tax in under the radar | Bankers Prepare To Assault Americans With VAT, Transaction Taxes | International World Bank ‘Farm-aid’ plan gets a modest start | The Obama Banking Regulation: Big Banks Are Too Politically Connected to Fail | Obama scolds Wall Street for fighting reform, pushes new regulation package | Greek civil servants strike, challenge EU/IMF talks | German bank severs Goldman ties | Goldman Sachs Eats Its Young | Foreigners continue to buy Canada | Flaherty stands firm against new bank tax | Canada’s brewing debt storm | Goldman Sachs charged with $1bn fraud over toxic sub-prime securities | Flaherty’s credit-debit code tougher than expected | Electricity rates surge in Ontario | China sells petrol to Iran while talking at UN about sanctions | Is Japan hurtling toward a debt crisis? | Do you take cash? In UK bills being supplanted by debit, RFID credit as retail revolution grows | Leveraged ETFs Are Under SEC Scrutiny | Oil sands deal gives China crucial voting bloc in bitumen export issue | Soros warns Europe of disintegration | Tucker: Bilderberg To Meet in Spain, Prolong Global Financial Recession For Another Year | Goldman fights accusations of greed | Roadblocks cleared for Windsor continental supercorridor link | Ontario unveils $8B in renewable energy projects | Investors rush to sell Greek bonds | Canada ‘enthusiastic rebound’ best in G7, OECD says | Small army to protect Toronto during G20 summit | Ontario launches U.S. bond | Paul Volcker: VAT, Carbon taxes may be necessary | Canadian dollar finds a solid resting place at parity | GM dealers sue law firm for conflict — Cassels also had government contract during restructuring | Nova Scotia budget hikes HST rate | J.P. Morgan rolls into Calgary | Auto industry rebound limited: experts | Toronto braces for G20 logistics crunch | Thousands protest Quebec budget | Wall Street: Looting Main Street | Manipulation of Gold Market by Financial Giants Exposed at CFTC Hearing | Britain pushes for new climate talks; IMF and global taxes to figure into wealth redistribution scheme | Obama sets sights on Arctic oil and gas exploration | The prison spending boom | G20 sounds warning over lack of progress on global regulation | EU ‘Free Trade’ and CETA: Advancing the Transatlantic Agenda | CETA worse than ACTA — EU Trade Negotiators Demand Canada Completely Overhaul Its Intellectual Property Laws | IMF struggles to conceal glee at Greek deal | Greece secures joint IMF/Eurozone bailout program | Facing years of deficits, Ontario freezes wages | Impact of $47B stimulus minimal: Fraser Institute | Canada’s GDP growth to top G7 in 2010 | Obama urges Senate to hand total oversight of financial sector to Federal Reserve, eliminate ‘Reserve’ part | Banking reforms urgent, Harper says at G20 sherpas’ meeting | RCMP needs 5,500 rooms during G20 summit | Greek PM threatens to go to IMF if no EU bailout | More stimulus spending coming | G20 ’sherpas’ meet with IMF, World Bank on Ottawa | Loonie passes 99 cents US | UK: Carbon capture storage lauded, will ‘generate 100,000 jobs and Ãƒâ€šÃ‚Â£6.5bn a year’ | Subsidized solar power projects approved in Ontario | Chinese facing debt time bomb | Pacific North American Regional Integration and Control | JPMorgan, Citigroup Helped Doom Lehman, Report Says | Is China actually bankrupt? | General strike cripples Greece as protesters clash with police | China rejects Barack Obama’s call to change yuan policy | Ontario tax collectors get $45K severance, keep jobs in HST federalization deal | Federal budget watchdog disputes Flaherty’s forecasts | MEPs vote overwhelmingly for an EU Tobin Tax | Green energy bubbles threaten to pop at both Federal and Municipal levels | Failed Banks May Get State Pension-Fund Backing as FDIC Seeks Cash | IMF chief calls for quota-based global warming slush fund | McGuinty eyes selling shares in LCBO, Hydro One | Frustrated Icelanders vent rage by voting no in referendum | Icelanders to vote no on debt deal | Ontario in no rush to sell Crown assets, minister says | Athens erupts as Greek austerity plan passes | Hope keeps Flaherty’s balanced budget afloat | Britain grapples with debt of Greek proportions | Greece unveils radical austerity package | Downtown Toronto to become a fortress for G20 summit | Athen’s coffers to run dry in two weeks, more cracks appear in Eurozone | IMF chief proposes new reserve currency | Man who broke the Bank of England, George Soros, ‘at centre of hedge funds plot to cash in on fall of the euro’ | Goldman role in Greek crisis probed | Bernanke Pushes to Keep Regulation Power as Some Senators Waver | Iceland stares into Icesave abyss | Leaked UN Documents Reveal Plan For “Green World Order” By 2012 | Citibank Controversy Puts Dubious FDIC Guarantee Back In The Spotlight | 702 U.S. banks in danger: FDIC | EU executive recommends fast-track membership for Iceland | Greek workers stage general strike | Tories hand out $75 billion worth of ’spending restraint’ | How EU Countries Cooked Books Using Derivatives | Inuit group blasts Cannon over summit | Toronto braces for G20 disruption, Ottawa to pick up security tab | Precedent setting meeting called as Canada’s premiers attend Governors Association in Washington DC | Convention centre confirmed as location for Toronto G20 summit | U.S. initial jobless claims rise unexpectedly | Goldman Sachs Helped Greece Obscure Debt Through Currency Swaps | Obama hails stimulus plan, warns of layoffs | Canadian household debt hits record high | Collapse of the euro is ‘inevitable’: Bailing out the Greek economy futile, says French banking chief | Euro currency union shows strain | B.C., 3 US states sign accord for ‘Pacific North America’ hours before Olympic kickoff | G20 security could strangle downtown | Shaw Cable moves for acquisition of controlling share in Canwest Global | Gordon Brown’s plan for global bank tax ‘a step closer’ | Stimulating our way into debt crises | EU leaders reach secret Greek bailout deal | GM to add second Oshawa shift early | Indigenous groups left out of Arctic leaders’ summit | G20’s Metro Convention Centre location to bump baseball, pride activities | Greek workers ‘give their reply’ to proposed austerity plan with national strike | Will Greece set off ‘global debt bomb’? | G7 brings competing visions to the Arctic | The Federal Reserve as Giant Counterfeiter | The US budget: Barack Obama’s $3.8 trillion red ink blueprint | EU cautions Greece about its deficit | Global Bank Insurance Levy Wins Support over Transaction Tax at Davos | Consumer debt loads are the new concern | No solution in dispute over Iceland deposits | Bloomberg: Secret Banking Cabal Emerges From AIG Shadows | Davos 2010: George Soros warns gold is now the ‘ultimate bubble’, calls for IMF to handle climate fund | Harper urges G20 to follow economic accords | Davos: Global climate fund threatens aid to developing world, campaigner warns | Obama Likely to Rebrand Climate Bill as Jobs Bill | Bankers unite against Barack Obama and Gordon Brown in call for world regulation | Geithner Told To Quit After E Mails Reveal Involvement In AIG Cover-up | IMF warns against retreat from stimulus spending | Why Did the ‘Stimulus’ Fail to Help the US Economy? | One quarter of US grain crops fed to cars — not people, new figures show | Terence Corcoran: Ontario puts $10B in the wind | Banks find gaping loophole in Obama financial reforms | Ontario Premiere McGuinty heralds Samsung ‘green energy’ deal | Obama talking tough with banks | High dollar to slow recovery, central bank says | EU Embargoes Canada’s GMO-sabotaged Flax Industry | Could Greece drag down Europe | EU urged to adopt bank supertax | Record surge in UK inflation | Iceland sets date for Icesave vote | ‘Green jobs’ are key to U.S., Canadian recovery: US Ambassador | Flaherty to use February G7 in Iqaluit (or Ottawa?) to push for global changes to financial system | ‘Significant chance’ of second financial crisis, warns World Economic Forum | Iceland says IMF aid likely delayed | Wall Street’s leading bankers admit: we made mistakes | The next big scam: Fraud endemic to carbon market | Flaherty’s economic plan blasted as leading to taxation or cuts | Idle job market hurting recovery, Flaherty warns | No new stimulus, economy ’stabilized’: Harper | Obama ponders bank transaction levy to recoup bailout shortfalls |TSX trades above 12,000 before retreating | Explosive Leaked Emails Expose Treasury Secretary Geithner’s Deception in ‘Backdoor Bailout’ | America slides deeper into depression as Wall Street revels | Tipping point at CanWest | Sarkozy says world currency disorder unacceptable | UK: Interest rates and quantitative easing on hold | Iceland blocks central bank debt repayment deal | Bernanke defends Fed’s actions, forecasts interest hikes | For more see The Memory Hole — Economics