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Europe Hails, But Won't Copy, Obama Bank Tax Plan

Friday, 15 Jan 2010 03:35 PM

Europe's leading economies showed no sign on Friday of adopting U.S. President Barack Obama's proposal for a levy on banks to repay taxpayers for bailouts but vowed to press on with their own ideas to target the sector.

The president of the Eurogroup of euro zone finance ministers, Jean-Claude Juncker, said Obama was right to propose the plan, which foresees Wall Street banks paying up to $117 billion to reimburse taxpayers for bailing them out.

"We have to see now in Europe ... whether we proceed in the same way," Jean-Claude Juncker, who is also Luxembourg's prime minister, told a news briefing in Luxembourg.

"I have no preconceived idea but I would find it difficult to adopt a common approach as tax matters are decided on a national level," he said, adding that euro zone finance ministers would discuss the idea at a meeting on Monday evening.

In Germany, Chancellor Angela Merkel said the United States had "conducted banking rescue in a much more extensive form."

"We also levy considerable fees for the benefits we make available to banks," she told a news conference, adding that she was waiting for an international discussion on the issue and favored a financial transaction tax.

Under Germany's "bad bank" plan, banks pay the government's bank rescue fund a fee for guarantees on troubled assets.

The Financial Times reported earlier on Friday that the United States would press other countries to take similar steps.

The paper quoted Treasury Secretary Timothy Geithner as saying: "We are going to see if we can encourage policymakers in other important financial centers to do something similar."

In France, Economy Minister Christine Lagarde said Obama's plans were appropriate for the United States while France's steps are suited for its domestic situation.

The French government has said it plans to put a 50 percent tax on traders' bonuses of above 27,500 euros ($39,670). Britain has announced a 50 percent levy on banks paying bonuses of over 25,000 pounds ($40,850).

"The tax we put in place on bonuses along with Britain is the most efficient response to the French system," Lagarde said.

Late last year, EU leaders urged the International Monetary Fund to pursue a global tax on financial transactions to limit the risk of another economic crisis, despite U.S. opposition.

British Prime Minister Gordon Brown called for consideration of such a tax at a summit of the Group of 20 developed and emerging nations in November, but Washington opposed the idea of a so-called Tobin Tax.

The British Treasury said on Friday that the United States had problems which were uniquely its own and required a different plan.

"The U.S. government expects to lose more than $100 billion from its intervention to deal with troubled assets.

It is right they take steps to recoup the cost of their interventions, taking account of their own domestic financial and political situation," a British Treasury spokesman said.

Obama and his Democratic allies in Congress are seizing on the chance to cast Wall Street as its political foil in a congressional election year when their party is worried Republicans might weaken its majority status.

Obama, who has labeled financial executives "fat cats" for the huge bonuses they have received, is taking an increasingly tough line against the industry.

Democrats hope that will resonate with an American public furious at multimillion-dollar bonuses being handed out by banks as the middle-class struggles with double-digit unemployment.

The fee is also aimed at helping to reduce the ballooning U.S. budget deficit.

© 2017 Thomson/Reuters. All rights reserved.

 
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Europe's leading economies showed no sign on Friday of adopting U.S. President Barack Obama's proposal for a levy on banks to repay taxpayers for bailouts but vowed to press on with their own ideas to target the sector. The president of the Eurogroup of euro zone finance...
europe,obama,bank,plan
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2010-35-15
Friday, 15 Jan 2010 03:35 PM
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