New UK PM to push for global bank levy

The West Australian June 4, 2010, 7:35 am
Britain's Prime Minister David Cameron

Getty Images / WPA Pool © Britain's Prime Minister David Cameron

Britain will push for adoption of a global bank levy at the Group of 20 summit next month despite the likelihood that some nations, such as Canada, will not join the plan, British Prime Minister David Cameron said.

Following talks in London with Canadian Prime Minister Stephen Harper, Cameron said he hoped the gathering of rich and developing countries would agree on the details of the tax, but conceded the summit may produce only a framework for those who plan to introduce the levy.

The United States, France and Germany all support the idea of imposing a levy on major banks to ensure they cover the costs of any future banking crisis.

Harper said Canada and other nations where banks weathered the global crisis intact are more cautious - Australia and Mexico have questioned the plan. Some fear any crisis fund could prompt more risky behaviour from banks.

Cameron said the proposals would be a key part of the agenda for the G-20 summit in Toronto on June 26-27.

"We'd prefer to have international agreement on a banking tax, and on all its details. Falling short of that, there is an opportunity to agree the details for those countries that will follow them," Cameron said.

Those in favour of a levy say it would lift from taxpayers the burden of any multibillion-dollar rescue of a failing financial institution in futures.

Cameron said governments had shown during the financial crisis they would effectively provide a safety net for ailing banks. "There's a logic in saying there's a charge they should pay in respect of it," he said.

Harper, who will hold talks in Paris on Friday with French President Nicolas Sarkozy, said Canada won't support the levy.

"I think it's a very different position here in Britain. The population was outraged at having to have bailed out the private sector, that's not the case in Canada and that's why we see the situation differently," he said.


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