Germany, France, U.K. Propose Levy on Banks Before G-20 Summit
U.K. chancellor of the exchequer George Osborne announced a levy on banks today . Photographer: Simon Dawson/Bloomberg
Germany, France and the U.K. jointly called for levies on banks’ balance sheets in an attempt to overcome opposition to the proposal by other members of the Group of 20 nations before this week’s summit.
U.K. Prime Minister David Cameron’s government today announced a bank levy as part of that country’s biggest peacetime deficit reduction. France and Germany are also finalizing details of their own bank taxes, according to a joint statement issued by the German government.
“All three levies will aim to ensure that banks make a fair contribution to reflect the risks they pose to the financial system and wider economy and to encourage banks to adjust their balance sheets to reduce this risk,” the e-mailed statement from the Finance Ministry in Berlin said.
G-20 ministers failed this month to agree on a global bank levy that’s promoted by the U.S. and European countries and opposed by countries whose banks fared better in the financial crisis, such as Canada and Brazil. The European Union has promised to push for the plan at the G-20 summit in Toronto.
A unified position isn’t necessary to make progress on the issue of bank levies at the G-20, a senior U.S. official said yesterday. U.S. Treasury Secretary Timothy F. Geithner has backed an overarching agreement among the G-20 to make banks pay for the cost of government support, while allowing countries to differ on implementation.
‘Financial Fires’
“We’re trying to establish the basic principle that, where governments are exposed to risk and putting out financial fires like this, that taxpayers don’t bear the burden of paying for the costs of those actions,” Geithner said in April after G-20 meetings in Washington.
The U.K. government said today it will impose a tax on bank balance sheets from next year that will generate 2 billion pounds ($3 billion) in annual revenue. The levy would tax banks’ balance sheets starting next year and be set at 0.04 percent in 2011, before increasing to 0.07 percent.
Germany laid out its framework in March for a bank levy that would generate more than 1 billion euros ($1.2 billion) for a dedicated fund. France has said it will channel whatever revenue is raised from levy into the budget.
‘Domestic Circumstances’
Today’s joint statement said that while the three nations’ bank levies will differ according to “domestic circumstances,” the amount of revenue generated from the various plans “will take into consideration the need to ensure a level playing field.”
The British Bankers’ Association said the U.K. levy needs to be internationally coordinated to prevent banks being “taxed multiple times for the same thing.”
Germany’s BdB lobby group, which represents more than 220 banks including Deutsche Bank AG and Commerzbank AG, said it supports the German government’s plans and welcomes the coordination with European partners. A spokeswoman for the Paris-based French Banking Federation, which represents about 400 banks, said a levy is “not good news for the economy.”
“It’s a measure that is going to weigh on French banks’ capacity to lend to companies and households,” she said.
To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net.
Rate These Stories
Rate this Page