IMF proposes global tax on banks

International Monetary Fund recommends banks pay to cover cost of potential future bailout.

    The proposals would see all institutions pay a bank tax as well as a tax on profits and pay [AP]

    The measures would see all institutions pay a bank tax as well as a further tax on profits and pay, aimed at protecting against future financial meltdown, the IMF report said.

    Finance ministers are expected to discuss the proposals at a meeting in Washington this week.

    Fee on profits

    The IMF said the new measures would allow companies to either pay into a government fund to help weak financial institutions or send the payments straight into general government revenue.

    It said the fee would be paid by all financial institutions, with the tax rate initially flat, but refined over time so that institutions deemed to make riskier moves would pay more.

    Another potential fee would be imposed on profits and pay at financial companies and paid to the government.

    Insurers, hedge funds and other financial institutions would also be required to pay the taxes under the new proposals.

    The IMF has also called for international co-operation in the introduction of the new taxes, saying such support would be "beneficial".

    "Countries' experiences in the recent crisis differ widely and so do their priorities as they emerge from it," it said.

    "But none is immune from the risk of a future - and inevitably global - financial crisis.

    "Unilateral actions by governments risk being undermined by tax and regulatory arbitrage."

    SOURCE: Agencies


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