Taxing solutions

19 January 2010 By Hugo Dixon Follow @hugodixon

The U.S. levy on bank liabilities is quite a good tax, which could encourage more sensible behaviour and raise badlyneeded cash. But to make it really good, and fly internationally as Sweden is now advocating it needs to be rejigged.

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Sweden has called on European Union countries to follow President Barack Obama's plan for a tax on bank liabilities. Sweden has already introduced a similar levy with the aim of gathering 75 billion Swedish crowns ($10.6 billion). The money would be set aside to deal with future crises.

The Swedish finance minister, Anders Borg, wrote to his Spanish counterpart in advance of a meeting of EU finance ministers on Jan. 19.

George Osborne, finance spokesman for the UK's opposition Conservative party, has already backed the idea. Meanwhile, Alistair Darling, the UK's finance minister, told the FT that, while he would not copy Obama and have another oneoff tax, he was keen on a globally agreed solution to "insure against the possibility of bank failures in future".

Paul Myners, financial services minister, is hosting a meeting later this month with representatives of the International Monetary Fund and other G7 countries to discuss possible taxes on financial institutions. A levy on liabilities will be one of the ideas on the table.

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