In a new report to the G20, the IMF recommend that two new special taxes should be levied on banks and bankers to meet the cost of any future financial crises. The two taxes target bankers pay and bank profits.
The first tax, a Financial Stability Contribution, would be a levy to fund any future government support. The second would be a Financial Activities Tax on the sum of the profits and remuneration of financial institutions.
The Fund’s report rules out a financial transactions tax – something marketed by campaigners as a Robin Hood Tax – as impracticable, and likely to cause economic damage by distorting flows of capital around the world. Its recommendation of a levy on balance sheets is not a surprise, although the imposition of this tax across the entire financial system rather than just banks, is more unexpected.