G20 finance ministers talk bank tax: Flaherty magic gains ‘victory’

The proposed global bank tax, as expected, took up much of the space at the G20 finance ministers meeting on Friday, and it seems to be losing some steam, in large part because of Canada’s opposition and persuasion. It is really important to understand that the Canadian government is the number one opponent of the tax, and is using its clout as a country which didn’t bailout its banks in 2008, to push others to follow them

The Canadian Press reports the victory on the tax for Flaherty:

Federal finance minister Jim Flaherty scored a decisive victory on a global stage on Friday, convincing some fellow world financial leaders that a multilateral bank tax to ward off another economic meltdown was not the route to take.

Not only was there no agreement among Group of 20 finance ministers and central bank governors about the International Monetary Fund’s appeal for such a levy, Flaherty said, but he’d brought some of his colleagues onside during the daylong discussions.

“I won’t give you a count, that wouldn’t be fair; let’s just say there’s a significant number,” a smiling Flaherty said following a news conference alongside his South Korean counterpart.

A Toronto Star editorial says Flaherty is right in opposing it, stating that

“none of Canada’s banks failed during the 2008/9 financial meltdown, nor did any of them require a bailout… [and] there is a danger a special tax to build up a bailout fund could actually create an incentive for banks to behave recklessly, safe in the knowledge that they will be bailed out.”

Funny, but this is exactly why the Tobin or Robin Hood tax is the right one. Banks won’t act recklessly if they are paying tax on every one of these transactions. Much of the reason for the collapse involved massive amounts of trading on risky securities such as derivatives, so if you slow them down through a tax on each transaction, you have much better chance of stopping this recklessness.

Thomas Walkom, writing in the Toronto Star as well, backs the tax

Numerous civil society proponents of bank taxes are also pushing forth with their campaigns ahead of the G20 meeting, including Oxfam Canada and the At the Table campaign (of which Oxfam is a member).