German Minister calls for a Global Tax

Steinbrück seeks global tax
By Bertrand Benoit in Berlin

Published: September 11 2009 20:38 | Last updated: September 11 2009 20:38

Germany’s finance minister has called for a global tax to be imposed on financial transactions in an effort to end what he derided as “binge-drinking” on markets.

In one of the more radical steps mooted by a world leader to reform the financial system, Peer Steinbrück said receipts from the tax would be used to repay the cost to governments of tackling the crisis, including fiscal stimuli and bank rescue operations.

“The cost of the crisis should not be borne alone by small taxpayers,” he told the Süddeutsche Zeitung newspaper.

One person close to Mr Steinbrück said under the proposal, a 0.005 per cent tax would be paid on all financial transactions by banks, insurance companies and investment funds.

The call opens up a divide in the German government ahead of the G20 summit and national elections this month. It clashes with the agenda of chancellor Angela Merkel, who will head the German delegation to the Pittsburgh summit on September 24 and 25.

Mr Steinbrück is vice-chairman of the Social Democratic Party, coalition partner to the chancellor’s Christian Democratic Union and its main political rival.

A spokesman for Ms Merkel told the Financial Times that the chancellor was willing to discuss an international tax on transactions but said it had close to no chance of being agreed. “You cannot float ideas like that two weeks before a summit,” he said. “I suspect this is mainly electioneering on the part of Mr Steinbrück.”

The call follows a move by Lord Turner, chairman of the UK Financial Services Authority, to float a similar idea of a global tax on financial transactions.

The leaders of the world’s 20 largest economies are expected to agree on fresh steps to curb bonus payments at international banks and boost their capital buffers to prevent a repeat of last year’s crisis.

Without an international deal, Mr Steinbrück said Berlin should adopt a domestic tax on stock exchange transactions.

Ms Merkel faces the unprecedented challenge for an outgoing chancellor of running an election campaign – she will address three rallies a day on average over the next two weeks – while conducting high-stake international negotiations.

On Sunday night she will face Frank-Walter Steinmeier, her foreign minister and SPD challenger, for the campaign’s first and only TV duel, at a studio in Berlin’s Adlerhof business park.

Although long tipped as the most likely winner of the poll, Ms Merkel has seen her party’s ratings soften lately.



Here we go again

A high ranking German minister is calling for the G20 to impose a global tax on all financial transactions to curb abuses by banks. His figure is 0.005% per transaction. He said this should pay for the bank bailouts.

I dont think this will ever work and may be a slippery slope for other global taxes. What is your take on this?





[edit on 11-9-2009 by Wherestheproof]

[edit on 11-9-2009 by Wherestheproof]

I remember being made fun of when I first uttered my misgivings about the movement towards a global tax based on a soft science like ecology or economics.

But we are mostly too stupid to fathom their plan it would seem. Too bad really. Things could be better. If they would all just vanish.

Well, I can dream, can't I?