Saturday November 7, 06:46 PM
Brown says G20 should consider transactions tax
ST ANDREWS, Scotland (AFP) - Prime Minister Gordon Brown called on the G20 here on Saturday to consider a tax on global financial transactions but the proposal looked doomed amid US opposition.
Brown told G20 finance ministers meeting in Scotland that "a global financial transactions levy" would be one way "to reflect the global responsibilities of financial institutions to society."
The issue was not mentioned in the meeting's final communique, while Jean-Claude Trichet, head of the European Central Bank, said it was "not discussed at all" by the meeting. British finance minister Alistair Darling said it was.
Meanwhile, US Treasury Secretary Tim Geithner restated his country's opposition to the proposal.
"No, that's not something that we're prepared to support," he told Sky News television.
"But again I think we all share a basic interest in trying to make sure we have a system where taxpayers aren't exposed in the future, and where the financial institutions are bearing the consequences of their mistakes."
Although Brown had warned earlier of the need to avoid "prohibitive costs" on the banking sector, he added: "I do not think these difficulties should prevent us from considering with urgency the legitimate issues."
Brown stressed Britain would not act alone on the so-called Tobin Tax, saying it would also have to be implemented by all the world's major financial centres, including the US, Europe, Asia, the Middle East and Switzerland.
"Let me be clear: Britain will not move unless others move with us together," he said.
"I believe in a strong global financial sector. I believe in an open and inclusive globalisation. But I believe that the global economy and global society will only thrive if it is brought within a rational and fair framework."
The comments represent a significant strengthening of Brown's position on the tax.
Previously, Britain was thought to be opposed to the idea because of fears it would damage the City of London (LSE: CIN.L - news) , Europe's largest financial district, and the United States has expressed similar concerns.
Debate over new versions of the Tobin Tax has accelerated since the financial crisis erupted last year, with France and Germany among nations leading calls for its introduction.
The tax was originally proposed in 1971 by Nobel Prize-winning economist James Tobin as a means of reducing speculation in global markets, but Tobin himself later began to doubt his own idea was workable.
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