Darling defends global tax idea despite opposition from US
Chancellor denies move is to please British voters
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CHANCELLOR Alistair Darling yesterday insisted the idea of a global tax on financial transactions was worth studying despite American opposition.
And he denied the idea had been floated by Gordon Brown as a banker-bashing move to please British voters. Mr Darling said: “It’s a question of fairness. I think there is broad agreement we should look at these things.
“They are not easy. But if you don’t look at them, you won’t know.”
The prime minister suffered an embarrassing rebuff when he floated the prospect on Saturday of a tax worldwide on financial transactions, only to have it flatly rejected by the United States. The Tobin Tax, named after the US economist who invented it, would apply to international financial transactions.
Mr Brown raised it as one of several possibilities for achieving what he called a “social contract” between the big financial institutions and taxpayers who had to pick up the bill for rescuing them.
But US Treasury Secretary Timothy Geithner flatly rejected the idea as “not something that we’re prepared to support.”
Canadian finance minister Jim Flaherty was equally dismissive, while IMF head Dominique Strauss-Khan said he believed a transaction tax was unlikely to be adopted.
In an interview recorded after the summit, Mr Darling insisted, however, that Mr Geithner was in agreement with the general principle.
“He is very clear that institutions rather than individuals should bear the cost of this,” Mr Darling told BBC Radio Scotland’s The Business programme.
“It wasn’t just us – at the G20 in Pittsburgh, when we met under President Obama’s chairmanship, we asked the IMF to look at these possibilities and come forward with proposals next year.
Mr Darling said the prime minister had emphasised that such a tax could only work with international agreement and that Britain would not go it alone.
The chancellor acknowledged there were difficulties, and such a tax could not operate in one country alone.
“We have talked to the Americans, just as we have talked to others – there are other countries too that are interested in looking at this,” he said.
“If you don’t look at the possibilities and ask yourself whether or not there could not be a fairer way of making sure these big multinationals make a fair contribution, then I think you would be missing something.”
Denying the call was motivated as a populist pre-election gesture, Mr Darling cited the cost of the bank rescues and said: “I think people will quite rightly say you should be looking at how these institutions make a contribution in the future.”
Mr Brown’s tax rebuff eclipsed the rest of the St Andrews summit, where ministers pondered how to handle the return to economic recovery, and how to finance a deal to combat climate change ahead of next month’s Copenhagen summit.
Mr Darling admitted: “I would have liked to have made a bit more progress.”
He said Britain had put “money on the table,” as had European countries and the US was willing to act. But he said: “It’s not surprising that a month before a big conference you sometimes get people not willing to reveal their true positions.”
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