IMF Asks G20 Nations to Impose Tax on Banks

The Group-20-nations has been advised by the International Monetary Fund to tax balance sheets, profits and compensation of banks to prevent another financial crisis, reports the Wall Street Journal.

 

"Expecting taxpayers to support the [financial] sector during bad times while allowing owners, managers and/or creditors of financial institutions to enjoy the gains of good times misallocates resources and undermines long-term growth," the IMF states in a briefing paper for the G-20 countries.

 

The Journal says the IMF proposes the Financial Stability Contribution (FSC) and the Financial Activities Tax (FAT). The FSC is a tax on balance sheets, including "possibly" off-balance sheet items, but excluding capital and insured liabilities. Meanwhile, the FAT is levied on the sum of profits and compensation of financial institutions.
 

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