TAX NEWS - JUNE 2010

IMF to Present Revised Bank Tax Proposal at Korea G-20 Meeting

by Ian Talley, 03 June 2010 -- The International Monetary Fund will present a revised draft financial-sector tax proposal at the coming Group of 20 meeting of financial ministers in South Korea this week, an IMF spokesman said Thursday.

A final proposal will go to the G20 meeting in Toronto later this month for review, but U.S. officials say it's unlikely that the summit will reach an agreement on a harmonized approach. He declined to elaborate on the details of the new draft proposal.

There is broad agreement among governments on the need to develop a program to help prevent financial-system failures, softening the impact of bank failures on the economy, but there is disagreement on how such a policy should be structured.

IMF spokesman David Hawley said fund officials would also reiterate calls at the Korea summit for countries facing economic challenges to "pursue credible and tailored fiscal adjustment," and that nations that have room in their economies should "continue to support demand to do so in the interests of both domestic and global growth."

"Countries will need to work on growth-friendly fiscal reforms, it is very important that the twin pillars of fiscal consolidation and growth be addressed together," he said. Such "critical" stimuli should focus on goods, labor and the financial markets to boost potential growth, Hawley said.

Separately, the spokesman also said that an IMF mission is scheduled to visit Greece June 14-18 for an interim review of the $110 billion IMF package. "The team will discuss with the authorities recent developments and implementations under the program," but there will be no disbursement of funds linked to the visit, Hawley said.

Next week, IMF officials will also visit Ukraine to discuss economic policies that could be supported by a fund program, the spokesman said. They would also likely schedule a negotiating mission to talk about new funding.