The drive for a punitive global tax on the worlds largest banks ran into the sand Saturday with key G8 and G20 nations dismissing the European plan as unwarranted. A last-gasp European push for the levy failed as a raft of developed and developing countries led by G20 hosts Canada rejected one-size-fits-all rules.
Britain,France and Germany had argued the tax would curb the type of excessive financial risk-taking that pushed the global economy to the brink,and help build a nest egg for future crises. But the idea came up against fierce opposition from nations whose banking sectors survived the worst of the crisis intact.
We have to expect that we will get a negative decision, German Chancellor Angela Merkel admitted. The French president and myself will speak in favour of it tomorrow but unfortunately we… don’t have a consensus neither on a bank levy nor on a financial tax. Australia,Canada and a host of emerging economies including Brazil,India and Mexico argued the levy would hurt banks that had little to do with the crisis and would not prevent future meltdowns. A levy in itself does not do anything to fix the underlying problems that caused the global financial crisis, said Australias deputy prime minister Wayne Swan.
The truth may well be that some people are looking to a levy because they just want to raise a little bit of extra money.
That type of opposition was enough to kill the plan. But the idea of a bank tax is unlikely to die off all together. Britain,France and Germany are now expected to move ahead with domestic taxes.