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IMF global bank tax would encourage risk

imf encourages risky lending cartoon

“The International Monetary Fund (IMF) has proposed new taxes on financial institutions to cover the costs of future potential bailouts, leaked documents show.”

According to the IMF proposals circulated to the Group of 20 advanced and developing countries on Tuesday, the measures would see all institutions pay a bank levy as well as a further tax on profits and pay. Source: PressTV

The United Nations and the IMF are not trustworthy. The French and German citizens overwhelmingly demonstrated to their leadership that they are unwilling to bail out another Eurozone member: Greece. So French and German leadership have Plan B: get the money from the IMF. The problem is that the IMF cannot bear the bail-out burden alone, and that it would have to seek Germany’s support. The real caveat is that EU rules prohibit bail-outs of troubled countries by other EU member nations under EU treaties.

Who pays the largest quota share into the IMF? The Unites States does and Obama and Pelosi support bailing out Greece. However, they are keeping it pretty quiet because American taxpayers (the 45% who pay federal taxes) are disgusted with the deficit spending happening in the USA. Indeed, under the current administration, the Unites States may go bankrupt. We should wonder how the Eurozone countries would feel if the Unites States asked them to bail out California?

imf lending chart

Let’s ask ourselves why the IMF would be asking for a global tax to pay for future bailouts. Are the global banks expecting they’ll need a future bailout? Do these banks feel they are entitled to bailouts funded by the taxpayer? This will only provide incentive to banks to continue high risk investments since they know there is a safety net. Conversely, there should be no safety net for banks paid for with your taxes when banks should be keeping a reserve of funds so they have their own safety net. Remember when banks were required to do that?

It’s a nobel idea and on paper, a money maker. However, it would require a security enforcement system (world government?) to monitor and regulate because the major Banking corporations are multinationals who are very good at not paying taxes whenever possible. For example, ExxonMobile paid not a single dime in taxes in the United State last year. Since the principle owners of ExxonMobile are also the principle owners of the Federal Reserve in the US; namely the Rockefellers, their policy on not paying anything they don’t absolutely have to will surely continue. Incidentally, the same family also controls JP Morgan and MorganChase. If anyone really thinks these people will pay a tax without a tooth and nail fight, they’re delusional.

Darling welcomes IMF’s ‘bank tax plans’

LONDON — The International Monetary Fund has proposed two new global taxes on banks and other financial institutions to cover the cost of future bailouts, the BBC reported, in a move that was welcomed by Chancellor of the Exchequer Alistair Darling.

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, said the broadcaster Tuesday, citing a leaked IMF report.

Governments of the Group of 20 advanced and developing countries — which account for more than 85 percent of the global economy — received the documents Tuesday, said the BBC.

Finance ministers would discuss the proposals this weekend, it added.

Britain has been pressing for the introduction of a global bank tax, and 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.

Prime Minister Gordon Brown told the Financial Times newspaper earlier this month that the large economies were getting closer to a deal.

Britain, France and Germany were broadly agreed on the need for a levy, Brown told the paper, adding he hoped the United States would join them.

The leader said he wanted a deal to be struck at the G20 summit in Seoul in November.

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. Source: AFP

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