Labour gets boost from IMF bank tax proposals
The IMF has proposed two taxes on banks to help prevent the banking sector plunging us into another financial crisis of a scale that could bring down the world economy. This is good news for Labour because in our manifesto we say we will lobby for a global banking levy. Gordon Brown pushed the IMF to consider options for coordinated tax measures.
The IMF proposes a flat tax on all financial institutions which could be raised or lowered depending on risk. The tax could form part of a country's tax revenue or be diverted to a special fund (this was an idea I proposed two years ago). It also suggests a 'financial activities tax' be considered on supernormal profits and high pay. The IMF also called for strong and coordinated regulation.
I've yet to work my way through the report but this seems a welcome step. We shouldn't propose taxes for their own sake. In this case, the nature of banks is such that they always generate instability and every few years the sector operates against the common good. It is right and just that some form of compensation and insurance is paid for their 'licence to operate'.