Thomas Mulcair, deputy leader of Canada’s opposition New Democratic Party, said Finance Minister Jim Flaherty should support efforts by some of his Group of Seven peers to tax the financial system, particularly the idea of a levy on financial transactions.
“If Canada sets itself apart on a lot of issues that seem to represent progress and the wave of the future and we’re not part of it, that can be a problem,” Mulcair said in an interview at Bloomberg’s Ottawa bureau. “When you’re absent, you’re always in the wrong.”
Canadian Finance Minister Jim Flaherty has opposed efforts by other G-7 countries to impose new taxes on banks, arguing the nation won’t impose “punitive” levies on its industry. The country didn’t need to bail out any of its banks through the financial crisis. Flaherty also opposes a tax of financial transactions.
Mulcair, 55, said a transactions tax, designed to not penalize small savers shifting investments, would help countries curb speculation and raise funds. Mulcair said he agrees with Flaherty and Bank of Canada Mark Carney that imposing a tax on banks to build a bailout fund risks fomenting moral hazard.
The concept of a transactions tax is often called a Tobin Tax, though current proposals go beyond the levy on currency transactions that the late Nobel laureate James Tobin proposed in the 1970s. The idea has had support from French President Nicolas Sarkozy, and officials in Japan and Germany. U.K. Prime Minister Gordon Brown was also calling for it until last month.
“If Canada were to exclude itself from a closed system like that, assuming that somehow Canadians or Canadian institutions would benefit, that would be a big mistake,” Mulcair said in the interview yesterday.
Mulcair, a member of the House of Commons’ finance committee, said his party would make a tax on financial transactions a part of its platform in the next election. He has represented the Montreal district of Outremont since 2007. Before that, he served as sustainable development and environment minister with the provincial Liberal Party.
To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at email@example.com.