TAX NEWS - JUNE 2010

Bank Tax: French, Canadian PMs Try To Smooth Bank Tax Divide

by William Horobin, 04 June 2010 -- The prime ministers of France and Canada Friday tried to smooth over the divide between members of the Group of 20 nations on a global tax on banks, saying that there is agreement on the principles that motivate the idea.

Canada has opposed the introduction of such a tax, while France has been one of its biggest advocates alongside other European countries.

"There is a large consensus in the G-20 on the objective. That objective is to limit the risky behaviour of banks," French Prime Minister Francois Fillon said. "It's just a question of means that is being questioned."

Canadian Prime Minister Stephen Harper acknowledged there are different views on a global bank tax, but played up the notion of a common principle behind it.

"Even if countries are doing things differently we can have a common principle to ensure that risks are taken by institutions and not tax payers," he said.

Harper was visiting Paris after a meeting with U.K. Prime Minister, where David Cameron said the U.K. will press ahead with a tax on the financial sector, even without global consensus.

In Paris, Harper reiterated that Canada has a different approach than that of a levy that relies on "an extremely tough regime of regulation."

Harper said in the U.K. capital that the G-20 in Toronto should focus on the implementation of reforms that have been agreed at previous summits.

But Fillon said the turbulence in markets means that the meeting should go beyond the agendas of the London and Pittsburgh summits to tackle rating agencies regulation, derivative products and volatile raw material prices, and a tax on the financial sector.

"Nothing stops us talking together, bringing our points of views closer, and finding strong principles that allow us to reach our objectives," Fillon said.