Britain's prime minister, Gordon Brown tells a G20 summit that governments should globally tax banks to fund future bailouts. The prime minister also meets with his Danish counterpart Lars Lokke Rasmussen ahead of a major environmental summit in Copenhagen.


ST ANDREWS, SCOTLAND, UNITED KINGDOM (NOVEMBER 7, 2009) REUTERS - World governments should consider urgently a levy on banks to fund future bailouts, British Prime Minister Gordon Brown said on Saturday (November 7), departing from London's longstanding resistance to a global tax.
France and Germany have led the way in Europe on seeking to force the financial sector to return some of the billions of public dollars ploughed into banks over a year of financial crisis.

London to date had resisted, mindful of the interests of its powerful financial services industry, which generates a large proportion of Britain's tax revenues, growth and jobs.

"I think we should discuss whether we need a better social contract to reflect the global responsibilities of financial institutions to our society," Brown told a meeting of financial policymakers from the G20 group of countries in St Andrews, Scotland.

"There have been proposals for an insurance fee (to reflect systemic risk) or a resolution fund or contingent capital arrangements or a global financial transaction levy," he said.

Brown's government this week forked out another 30 billion pounds on bailing out two of its biggest banks for the second time, and opinion polls all show him heading for a hammering by the opposition conservatives in next year's election.

Brown said the International Monetary Fund would review the possibility of a global transaction tax and report back in April next year -- signalling the G20 had agreed as a group to take up the matter more seriously.

"I do not in any way underestimate the enormous and difficult and practical and technical issues that will need to be overcome that a globally cohesive centre requires and raises."

"But I do not think these difficulties should prevent us from considering with urgency the legitimate issues I have discussed," he said.

Britain has repeatedly rejected a long-standing idea for a so-called Tobin Tax on foreign exchange transactions.

G20 officials said the levy mentioned by Brown would be broader and could be on all financial transactions or bank earnings. The levy would be small, perhaps around 0.005 percent be much lower than a Tobin Tax.

Officials at the G20 meeting said a levy and the funds raised could be used not only to pay for future bank bailouts but also to fund development and other areas.

Brown said any measure would have to be global in nature and implemented by all the world's main financial centres in the United States, European Union, Asia, Middle East and Switzerland.

Brown also addressed the issue of climate change, which lies at the heart of the the third meeting of Group of 20 finance ministers and central bankers.

"In a month time the world convenes in Copenhagen in the hope of signing the first fully global agreement on climate change. It is essential that we urgently move toward resolving the issues that still divide our nations," Brown said.

Following his speech, the premier met with his Danish counterpart, Lars Lokke Rasmussen, who will host a major environmental summit in Copenhagen next month.

Britain is is determined to push forward on an ambitious target to meet the costs of climate change by 2020, ahead of the summit.