Merkel, Sarkozy Call For Bank Tax

by Ulrika Lomas, Tax-News.com, Brussels

15 June 2010

Germany’s Chancellor, Angela Merkel, and France’s President, Nicolas Sarkozy, have decided to forward a joint letter to the G-20 to request the adoption of both a global banking levy and a financial transaction tax.

It had been thought however that the idea of multilateral banking taxes had been shelved by world leaders in favour of a greater commitment to financial regulatory reform. The communiqué issued following the G20 meeting of finance ministers and central bank governors in South Korea on June 4 and 5, could only agree that “the financial sector should make a fair and substantial contribution towards paying for any burdens associated with government interventions.”

However, European leaders have persisted in their calls for banking taxes, although there has been some discussion on where the resultant revenues would be utilised. Some have argued that the funds should be used directly against fiscal deficits accumulated during the economic crisis, while others have advocated the placing of tax collected within a fund to insure against any future crisis.

Chancellor Merkel and President Sarkozy’s letter is designed to ensure that such taxes will be part of the G20 agenda during its meeting in Toronto on June 26 and 27. It is perhaps ironic that the letter will have to be sent to the summit host of that G20 meeting, who will be Stephen Harper, the Canadian Prime Minister.

The most vocal opposition to a multilateral banking levy has been expressed by those countries, and particularly Canada, whose banks did not cause the kind of problems seen in the United States and in Europe.

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