IMF proposes global bank tax plans—report

LONDON—The International Monetary Fund has proposed two new global taxes on banks and other financial institutions to cover the cost of future bailouts, the BBC reported.

The measures would see all institutions pay a bank levy as well as a further tax on profits and pay, which would aim to protect against future financial meltdown, said the broadcaster Tuesday, citing IMF documents.

Governments of the Group of 20 advanced and developing countries—which account for more than 85 percent of the global economy—received the documents Tuesday, said the BBC.

Finance ministers would discuss the proposals this weekend, it added.

Insurers, hedge funds, and other financial institutions would also be required to pay the taxes under the IMF proposals, despite the fact they were less implicated in the recent financial crisis.

This was to prevent banks reclassifying activities they currently carry out as other services—such as insurance or hedge-fund services—in an effort to avoid the levy.

The general levy, called the “financial stability contribution,” would start at a flat rate but would eventually be changed so businesses judged to be riskier paid more, said the broadcaster.

Several proposals have been put forward by different governments to cover the costs of future economic rescue packages, including a tax on financial transactions.

But many have been reluctant to unilaterally introduce taxes to pay for future bailouts, believing coordinated action is the only option.

If governments acted alone, it is feared that institutions would simply move their operations to places with less stringent financial regulation.

Britain has been pressing for the introduction of a global bank tax, and Finance Minister Alistair Darling welcomed the contents of the leaked IMF proposals.

“The recognition that banks should make a contribution to the society in which they operate is right,” he said.

Prime Minister Gordon Brown told the Financial Times newspaper earlier this month that the large economies were getting closer to a deal.

Britain, France, and Germany were broadly agreed on the need for a levy, Brown told the paper, adding he hoped the United States would join them.

The leader said he wanted a deal to be struck at the G20 summit in Seoul in November. –Agence France-Presse