The Telegraph says a report has been delivered to G20 nations yesterday, but has yet to be published, with the IMF calling for a “financial stability tax”, which levies a small charge on a banks’ balance sheet, and a “financial activities tax”, which taxes excess profits, including bonuses.
The IMF’s proposals could have a massive impact on the profitability of all financial institutions should they be imposed by G20 governments.
The report calls for the proceeds to go to a fund to repair the economic damage by the past, and an future financial crises, as well as general government revenues.
An aide for Gordon Brown said the proposals were radical and in line with what Brown had called for at the G20 summit last November.
The IMF’s report has labelled a financial transactions tax, known as the Robin Hood Tax, as impractical and likely to cause economic damage by distorting flows of capital around the world.
The report comes hot on the heels of the IMF’s Global Financial Stability Report which cut its forecast for the total losses for the crises from £2.3 trillion to £1.5 trillion.
The British Bankers’ Association says it is concerned about what effect the move would have on the competitiveness of the UK’s financial sector.
A BBA statement says: “UK banks have already made structural changes – as well as being required to hold more cash and capital – to limit future risk. The banks have also historically been major contributors to the Exchequer as well as providing direct and indirect employment for around a million people.
“We were expecting proposals from the IMF but, on the face of these reports, these would seem to be both wide-ranging and significant covering two types of taxation spread across the piece.
“All taxes have an impact and more tax has more impact. The recommendations need to be carefully examined but we remain concerned about moves which would place the UK industry at a competitive disadvantage internationally. We also need to see all the detail of what is proposed – and how any new levy and tax would apply – to determine the effect it would have.”