A divide is developing between Canada and Europe on the issue of bank taxes, which is likely to come to a head at the G8/G20. European countries are wanting to tax financial transactions as a means to build up a fund for any future bailouts, while the Canadian government (and Canadian banks – surprise) says that it is a bad idea.
Canadian Finance Minister Jim Flaherty: “We’re not going to impose capital taxes on our financial institutions. We’re against raising taxes and I hope to be able to convince my colleagues that these are unwise moves.” He also states that the U.S. will be siding with Canada on this issue.
Flaherty used a moment to praise the Canadian banking system and suggest that the best thing that governments could do for their banking systems is to follow the Canadian model of low debt, rather than creating new taxes.
The ‘wonderousness’ of the Canadian banking system is going to be a theme that will be touted ad nauseum by the Canadian government during the summits. But is it all that? There are certainly grumblings out there that the Canadian financial sector has more problems than it will admit (such as a U.S. style housing bubble)
There is clearly a need to put this under a bit more scrutiny, watch here in the weeks ahead!