The IMF has proposed two new global taxes on banks and other financial institutions to cover the cost of future bailouts, the BBC reported.
The measures would see all institutions pay a bank levy as well as a further tax on profits and pay, which would aim to protect against future financial meltdown, the broadcaster said on Tuesday, citing a leaked IMF report.
Governments of the G20 advanced and developing countries — which account for more than 85 percent of the global economy — received the documents on Tuesday, the BBC said.
Finance ministers would discuss the proposals this weekend, it said.
Insurers, hedge funds and other financial institutions would also be required to pay the taxes under the IMF proposals, despite the fact they were less implicated in the recent financial crisis.
This was to prevent banks reclassifying activities they currently carry out as other services — such as insurance or hedge-fund services — in an effort to avoid the levy.
The general levy, called the “financial stability contribution,” would start at a flat rate but would eventually be changed so businesses judged to be riskier paid more, said the broadcaster. Several proposals have been put forward by different governments to cover the costs of future economic rescue packages, including a tax on financial transactions.
But many have been reluctant to unilaterally introduce taxes to pay for future bailouts, believing coordinated action is the only option.
If governments acted alone, it is feared that institutions would simply move their operations to places with less stringent financial regulation.
The IMF report, which will form the basis of a submission to the G20 summit in June, states international cooperation in the introduction of the new levies would be “beneficial.”
Britain has been pressing for the introduction of a global bank tax, and British Finance Minister Alistair Darling welcomed the contents of the leaked IMF proposals.
“The recognition that banks should make a contribution to the society in which they operate is right,” he said.
Meanwhile, Europe’s debt crisis is sending investors flocking to the emerging markets of Brazil, China and India, the IMF said on Tuesday.
In a report on the state of the global economy, the IMF said the debt crisis in Greece and other eurozone nations had caused investors to look to emerging nations for profit.
“The crisis has altered perceptions about risk and return in mature [markets] relative to emerging markets,” the IMF report said.
“Capital is flowing to Asia [excluding Japan] and Latin America, attracted by strong growth prospects, appreciating currencies, and rising asset prices, and pushed by low interest rates in major advanced economies, as risk appetite continues to recover,” the IMF said.
Separately, a mission of EU and IMF officials began talks with Greece’s finance minister yesterday on details of an emergency loan mechanism to help the country face its rising borrowing costs.
The officials from the European Commission, the European Central Bank and the IMF made no statements as the talks began, a reporter at the finance ministry said.
They are expected to spend around 10 days discussing the technical aspects of the loan.
“The discussions concern a three-year programme of economic policies ... which can be supported with financial assistance from eurozone members and the International Monetary Fund should Greek authorities decide to request the activation of the mechanism,” the finance ministry said in a statement.
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