BC Tax: Pushing back the global tax
We did it! The major countries of the world had been saying for months that all banks must get hit with a global tax.
Prime Minister Harper and our government were alone in saying "No thank you." Now the verdict is out. The major industrialized nations have stepped back. They have now agreed with Canada's position. It will be left to each country to decide whether there should be an extra tax on their banks or not.
How did this all happen and what's wrong with whacking the banks with another tax anyway?
First, let's be clear. We're not talking about protecting our banks from paying taxes. Banks are like any other business, large or small. They have to pay taxes on their profits. What the governments of the world were talking about was that all banks should get hit with a 'levy'.
The reason? Many banks all over the world were part of the problem of the global recession. They had loaned out and levered large amounts of money, far beyond the reserves they had on hand.
So when the bubble burst and mortgages and loans by the millions began to fail, the banks were not able to cover the losses of the debts they had created.
Many governments had to step in and give (taxpayer) money by the billions to financial institutions to keep them from failing.
So, with the global economy beginning to turn around (tentatively), all those governments understandably said that they wanted some of that money back. They want to establish a fund that banks have to pay into as protective cushion in case this whole meltdown happens again.
While we have some sympathy for that position we have one main objection with it. Canadian banks were not part of the problem. We had regulations in place which required our banks to have certain reserves on hand before they go lending. And they have to stay within those limits.
We also had regulations in place prior to the global meltdown which prevented our financial institutions from getting into the subprime mortgage problem. So our banks were not able to take advantage of the same types of opportunities as other banks in other countries before the meltdown.
And our financial institutions did not have to be bailed out after the downturn.
So, for the last several months, in international meetings at home and abroad, we have been making our case against Canada having to pay the global tax.
There's another thing to keep in mind here. Any tax on our financial institutions would of course have to be passed on to you and me, the consumers of bank services.
So all in all, we are pleased that the international community has come around to our point of view on this. We also think that our example of proper regulation in the bank sector may influence some other governments to follow suit.
It's gratifying to know that we can be a positive example on the world scene in this and in many other ways. It's also a good reminder that just because we hold a view that is different from the prevailing opinion doesn't mean it's the wrong position.
On another note, this week we introduced legislation to put an end to notorious criminals like Clifford Olsen collecting tax-paid benefits. As a matter of fact, when serial child killer Olsen turned 65 it suddenly became obvious that he and others like him could be collecting benefits of over $1,000 a month.
The purpose of Old Age Security benefits are to help seniors with the basics of life. Olsen and others already have all those basics paid for by you and me. So people were asking 'why does he get more?'
Good question. We're putting a stop to it.