TAX NEWS - JUNE 2010
EU's Barroso Calls for More Levies on Banking
"Bearing in mind all the efforts made by our taxpayers to save the financial system, it seems to be only reasonable that there is a contribution from the financial sector," said Jose Manuel Barroso, commenting on a bank profit tax. "That's something that ordinary people would understand."
Barroso's remarks come weeks ahead of a meeting of global G20 leaders and will build momentum for a scheme to charge the banking industry for the costs of crisis.
He suggested pushing forward with a levy for a crisis fund as well as either a tax on financial transactions or some other step that would pound bank profits, although he admitted this was unlikely to win global backing.
The former Portuguese prime minister made his comments as he outlined EU plans to reform an industry that has borne much of the blame for the economic crisis, a process that has been dogged by delays and disagreement between countries.
The Commission is influential in Europe, putting forward laws for the 27-country bloc but the success of proposals depends on states, especially larger ones such as Germany and France.
On Wednesday, Barroso and his two top commissioners, financial services chief Michel Barnier and economy head Olli Rehn held a press conference to underline their commitment to shake up banking.
"If member states cannot reach agreement on these issues now, they never will," said Barroso. "There is consensus that action must be taken"
G20 world leaders are meeting later this month in Canada. There is consensus on the need to do more to make banks more responsible and put aside funds to prevent or cover any future banking failures. But Canada, Australia and others whose banks rode out the financial crisis well, are skeptical on the need to impose actual levies on banks and create crisis funds.
While German chancellor Angela Merkel supports a tax on bank transactions, diplomats believe the new British government would not back such a measure.
"We support a bank levy and we are pushing for international agreement," British financial services minister Mark Hoban said late on Wednesday.
Many are skeptical that Barroso can bring the two together to prevent European countries from presenting conflicting ideas in Toronto.
TIGHTER CONTROLS
On Wednesday, Barnier, the former French minister in charge of an overhaul of financial services, said he was examining setting up a European credit rating agency to rate governments.
Credit rating agencies have been criticized for downgrading countries as the euro zone scrambled to mount a $1 trillion rescue package to restore confidence.
Barnier said rating agencies would soon be put under the watch of a new pan-European supervisor with power to withdraw their licenses to do business if they break EU rules.
Rating agencies will be asked in December to provide more information about how they decide the creditworthiness of countries or companies. Although they will not have to justify decisions, they must outline how they make them.
Some European officials, frustrated with downgrades of states as the euro zone struggled to win back investors' confidence, hope this will tighten control of Moody's , Standard and Poor's and Fitch .
But others fear it could be used to interfere with ratings. Washington too is skeptical about the idea of a European rating agency, fearing it could sideline the existing agencies.
Since taking his post in February, Barnier has pledged tough action on issues from bankers' pay to measures making lenders hoard more capital. So far, however, he has made only one concrete proposal -- to introduce a bank levy.
He is also under pressure to produce new rules to control speculators. But EU sources have said Barnier's draft law to demand closer monitoring of the opaque derivatives market will be delayed from July until September.
© 2009-2012 TaxRates.cc
2011 - 2012 Tax Rate Guide and Tax Help Website
