U.S. Treasury Secretary slaps down global tax!
The international finance community was split last night after Gordon Brown surprised world leaders by announcing that he wanted to explore a multi-billion pound worldwide tax on financial transactions.
LONDON, England - November 7, 2009 - The volte-face by the Prime Minister on a global transaction tax, which had previously been briefed against by the Treasury, comes after public anger that banks are still free to make multi-billion pound profits despite being propped up by taxpayer money.
Last night, the U.S. Treasury Secretary, Timothy Geithner, said Amerika did not back proposals for fees on financial transactions. "A day-by-day financial transaction tax is not something we're prepared to support," he said. France and Germany have traditionally been pro such a global tax.
Addressing G20 finance ministers at a meeting in St Andrews, Brown said that a global tax on transactions, or "Tobin tax", should be considered to address the need for "a better economic and social contract to reflect the global responsibilities of financial institutions to society."
It is not yet clear how a levy on transactions would be designed, but the Austrian Institute for Economic Research has calculated that if shares, derivatives and currency transactions were taxed at a rate of £5 in every £10,000, some $690 billion (£517 billion) would be raised globally each year.
The idea of such a tax is to make banks pay for the risks the financial sector poses to the broader economy, and the prevailing possibility that the taxpayer will be called upon to the bail them out.
LONDON, England - November 7, 2009 - The volte-face by the Prime Minister on a global transaction tax, which had previously been briefed against by the Treasury, comes after public anger that banks are still free to make multi-billion pound profits despite being propped up by taxpayer money.
Last night, the U.S. Treasury Secretary, Timothy Geithner, said Amerika did not back proposals for fees on financial transactions. "A day-by-day financial transaction tax is not something we're prepared to support," he said. France and Germany have traditionally been pro such a global tax.
Addressing G20 finance ministers at a meeting in St Andrews, Brown said that a global tax on transactions, or "Tobin tax", should be considered to address the need for "a better economic and social contract to reflect the global responsibilities of financial institutions to society."
It is not yet clear how a levy on transactions would be designed, but the Austrian Institute for Economic Research has calculated that if shares, derivatives and currency transactions were taxed at a rate of £5 in every £10,000, some $690 billion (£517 billion) would be raised globally each year.
The idea of such a tax is to make banks pay for the risks the financial sector poses to the broader economy, and the prevailing possibility that the taxpayer will be called upon to the bail them out.
