French President Nicolas Sarkozy said Group of 20 nations made progress on a future financial-transaction tax that might be used to finance poverty reduction and help the environment.
“The principle of a tax moved forward to the point that we can discuss how its receipts will be used,” Sarkozy said in his closing remarks at the G-20 summit in the southern French resort of Cannes today. “France will fight for this tax to become a reality. We will not wait for the rest of the world to implement it to start doing it.”
U.S. President Barack Obama stopped short of endorsing a tax, instead reiterating that big banks should in some way pay for the costs of cleaning up the financial crisis. Administration officials said in Cannes that the U.S. favors levying a fee on big banks linked to the risks they take.
France and Germany have led a push for global implementation of a financial-transaction tax that would extract revenue from banks and other firms in the industry. European supporters say a tax would raise revenue to tackle climate change, reduce poverty and meet other budget needs as many nations grapple with fiscal austerity programs.
The U.S. has in contrast focused on charging banks for their own regulation. An Obama administration official told reporters today that governments will adopt different approaches for funding the protection they provide to the financial system.
U.S. regulators also will move aggressively to make banks hold more private capital to reduce the risk of taxpayer losses, the official said. Obama has proposed a “financial-crisis responsibility fee” to be paid by the largest banks, and the official noted that the U.S. already effectively collects a small transaction tax in the form of deposit-insurance assessments.
Sarkozy said the U.S. position does not go far enough. “I welcome Obama’s openness to a contribution by the financial sector, but he is not in favor of a tax,” the French president said.
In September, the European Union’s executive arm proposed a transaction tax that would take effect in 2014 and raise about 57 billion euros ($78 billion) a year. Bill Gates, chairman of Microsoft Corp. and co-chairman of the Bill and Melinda Gates Foundation, endorsed a tax as one way to finance development in a presentation to the G-20 yesterday.
The U.K. government says any tax can only be viable if applied worldwide and told banks in a letter this week that such support doesn’t exist.
EU Tax Commissioner Algirdas Semeta is scheduled to present the tax proposal at next week’s meeting of the bloc’s economy and finance ministers in Brussels. The EU proposal would not tax consumers directly, nor would it prevent institutions from passing costs of the tax on to their customers. The Obama administration says its crisis fee would not affect retail consumers.
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