UK NEWS

US SCORNS BROWN'S PLAN TO TAX THE BANKS

BROWN: Suffers another blow

Sunday November 8,2009

By Ted Jeory

GORDON BROWN’S self-styled status as “the man who saved the world” suffered a blow after the US rejected his idea for a global tax on banks.

American and Canadian treasury chiefs rubbished the proposal for a so-called Tobin tax on global financial deals as unworkable.

The rebuff came at the G20 summit of finance ministers in St Andrews, in Scotland, where the Prime Minister had outlined his ideas to help the world economy.

The tax is named after James Tobin, a US economist who proposed a tax on cross-border currency trades in 1970s.

In his speech to the summit, Mr Brown said the tax would work through an insurance fee and levies on financial transactions.

He stressed that the measures would have to be implemented by all major financial centres, including the US, Europe, Asia, the Middle East and Switzerland.

But within hours, both US Treasury Secretary Timothy Geithner and Canadian finance minister Jim Flaherty had poured scorn on the idea.

Mr Geithner said: “That’s not something that we’re prepared to support. This is an idea that has been around for a long time. Many countries have a lot of experience with these kinds of taxes. I think the experience has been mixed.” Mr Flaherty said: “We are in the business of lowering taxes. It is not an idea we would look at.”

British Bankers’ Association chief executive Angela Knight said: “The reason it has never been implemented is, while theoretically it is OK, practically it doesn't operate.”