Page last updated at 13:48 GMT, Monday, 22 March 2010

Germany 'to impose banking levy'

Frankfurt skyline
German banks face the imposition of a new tax

Germany's coalition government is reportedly planning a banking levy to protect taxpayers from the costs of bank bail-outs.

Leading conservative politician Volker Kauder said the money would stop banks from relying on state-funded rescues.

The levy would raise "billions of euros" from the financial sector, he has predicted.

The move has been approved in principle by the coalition, he told German TV station ZDF.

Mr Kauder, the parliamentary leader of Chancellor Angela Merkel's conservative bloc, said coalition leaders agreed that banks "cannot in future gamble at the taxpayer's expense".

"Provisions must be made so that they - if it gets difficult - pay for things themselves," he added.

The German government dug deep into its treasury coffers to provide a €500 billion ($679 billion) rescue package to shore up the banking system late in 2008.

The new proposal seems to be designed to dissuade banks from taking risks in future which would see them begging for more government hand-outs.

Mr Kauder said that the size of the levy would vary depending upon the amount of systemic risk carried by a bank, with savings banks and co-operative banks paying less than banks that carried out more speculative activities.

Mrs Merkel said Germany's Finance Minister Wolfgang Schaeuble would present proposals before Easter.

Global tax on bankers?

Some politicians have called for a global policy on bank levies.

The International Monetary Fund (IMF) has been asked by the G20 group of wealthiest countries to examine how banks can best contribute to the costs of insuring themselves against failure.

But so far countries have adopted a piecemeal approach to the issue.

In January, US President Barack Obama said Wall Street must repay $117bn (£72bn) to taxpayers and criticised banks for "massive profits and obscene bonuses".

That tax is to recoup the money which US taxpayers have spent bailing out the banks during the financial crisis and follows populist anger at banks, seen as being responsible for causing the recent economic crisis.

In the UK, the Labour government imposed a one-off super-tax on financial sector bonuses but has stopped short of taxing banks to recoup state money.

The Conservative opposition says it will introduce a bank levy to claw back taxpayers' money if it wins this year's general election - and will press ahead with the tax on a unilateral basis anyway if it fails to get international support.

Labour says a levy could cost jobs in the financial services industry.

The UK Chancellor Alistair Darling told the BBC a number of financial institutions could move abroad if the UK acted alone.

The Conservatives insist there is evidence of an emerging international consensus on the issue.

The shadow chancellor, George Osborne, said any move from the Germans would be welcome.

He said: "This... shows that we are part of the mainstream of international thinking on this issue. This latest development is a sign of growing international momentum behind this policy and we will continue to work towards achieving an international consensus."

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