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G20 To Defer Bank Tax Debate

by Leroy Baker,, New York

03 June 2010

US Treasury Secretary, Tim Geithner, has said that the finance ministers of the Group of 20 (G20) major economies, at their meetings in South Korea on June 4 and 5, will concentrate on financial regulatory reform, rather than a global tax on the banking system.

In recent reported comments, he was of the opinion that there was not yet a consensus within the G20 for a bank levy. While he saw a wide endorsement in the United Kingdom and the European Union for the type of bank tax proposed by the US, he did not see universal support for the measure, and felt that this was unlikely to change during the meetings.

He was probably referring to the opposition to such a tax within certain G20 countries, such as Canada and Japan, whose banks did not cause the kind of problems seen in the US and in Europe. Further substantive discussion of the bank levy will probably need to await the full meeting of the leaders of the G20 nations later in the year.

He felt that the G20 should focus instead on protection of the global recovery at a time when many countries are attempting to reduce their budget deficits. He also felt that a global consensus could be achieved on regulatory reform of the financial system, especially with regards transparency and disclosure, a framework for derivative markets, and capital standards for financial institutions.

TAGS: tax | economics | fiscal policy | banking | capital markets | United States | G20 | tax reform | standards

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