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EU leaders call for European banking taxes

Business Materials 17 June 2010 20:17
European Union leaders on Thursday agreed that they should bring in new fees to make banks pay towards recovery from the financial crisis, but that each state would choose its own system, diplomats at an EU summit in Brussels said
EU leaders call for European banking taxes

European Union leaders on Thursday agreed that they should bring in new fees to make banks pay towards recovery from the financial crisis, but that each state would choose its own system, diplomats at an EU summit in Brussels said, DPA reported.

EU leaders are keen not to repeat the experience of the last two years, when they had to bail out banks with public funds to prevent the financial crisis from worsening. The intervention left them with huge deficits, which will probably take years to be closed.

The summit "agrees that member states should introduce a system of levies and taxes on financial institutions to ensure fair burden sharing," national leaders agreed in a joint statement, according to diplomats.

The text is the result of a compromise after a number of states, including Luxembourg, pushed for the EU to set up a tax on financial transactions, while others called instead for a levy on bank risk-taking.

"I think we need a financial transaction tax. It cannot be that international banks - financial market actors - don't contribute financially to the results of the crisis," said Luxembourg Premier Jean-Claude Juncker as he arrived at the meeting.

But his Swedish counterpart, Fredrik Reinfeldt, said that the EU should instead set up a levy on banks to fund an insurance system which would pay out in any future bank rescues.

Sweden experimented with a transaction tax in the 1980s, and saw much of its business vanish to Oslo and London as a result. The country now runs its own bank levy, which pays into a fund which would bail out any banks which needed rescuing in the future.

"We don't think that (a transaction tax) is the solution to the problems we have," Reinfeldt told the German Press Agency dpa.

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