Brown plugs financial transactions tax

8 Nov 2009, 12:20 pm   -   Source: AAP
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British Prime Minister Gordon Brown called on the G20 to consider a tax on financial transactions to make banks more accountable to society.

British Prime Minister Gordon Brown called on the G20 here on Saturday to consider a tax on financial transactions to make banks more accountable to society.

Brown told G20 finance ministers meeting in Scotland that "a global financial transactions levy" would be one way "to reflect the global responsibilities of financial institutions to society."

Although the British premier warned of the need to avoid "prohibitive costs" on the banking sector, he added: "I do not think these difficulties should prevent us from considering with urgency the legitimate issues."

Brown stressed Britain would not act alone on the so-called Tobin Tax, saying it would also have to be implemented by all the world's major financial centres, including the US, Europe, Asia, the Middle East and Switzerland.

"Let me be clear: Britain will not move unless others move with us together," he said.

"I believe in a strong global financial sector. I believe in an open and inclusive globalisation. But I believe that the global economy and global society will only thrive if it is brought within a rational and fair framework."

The comments represent a significant strengthening of Brown's position on the tax.

Previously, Britain was thought to be opposed to the idea because of fears it would damage the City of London, Europe's largest financial district, and the United States has expressed similar concerns.

Debate over new versions of the Tobin Tax has accelerated since the financial crisis erupted last year, with France and Germany among nations leading calls for its introduction.

The tax was originally proposed in 1971 by Nobel Prize-winning economist James Tobin as a means of reducing speculation in global markets, but Tobin himself later began to doubt his own idea was workable.

The idea was revived in August by Adair Turner, the chairman of Britain's financial watchdog, the Financial Services Authority (FSA), as a way of providing a safeguard against another economic slowdown.

But his proposal was greeted with derision by many in the City.

Campaigners welcomed Brown's speech, with Oxfam saying it signalled that "payback time for banks could be just around the corner".

"A tax on banks would be a major step towards clearing up the mess caused by their greed," the group's senior policy advisor Max Lawson said.

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