Friday, June 18, 2010
EU leaders agreed member states should introduce systems of both levies and taxes on banks to claw back the billions of euro taxpayers have sunk into rescuing them, but this is likely to be done on a country by country basis.
Taoiseach Brian Cowen would not say what form this would take in Ireland.
He said Ireland already had such a charge based on the money being paid by the banks for the state guarantee scheme.
He pointed out that the exchequer would receive a €1 billion in charges from the banks by the end of September for the €400bn guarantee Ireland put in place in September 2008.
The scheme, which has imposed the biggest debt burden per person globally, is likely to be extended to at least the end of December and the charges increased under EU rules.
Mr Cowen said: "There has to be a procedure put in place where banks would make a contribution back to the wider economy and to national exchequers in due course. We have it based on the guarantee we put in place … that is a similar mechanism and a system of levies and taxes can be worked on now."
It will be up to each country to decide how to use the money. The Taoiseach indicated he favoured the money going straight into the national coffers to help refund taxpayers. Some countries favour creating an insurance fund against future banking crisis.
The transaction tax would be similar to the US idea of a Tobin tax and would be based on a payment per transaction. It was pushed by Austria, although Sweden, who tried such a tax some years ago, cautioned that it would have be done across the EU and even globally if countries were not to lose out on transactions moving to countries without the tax.
The only country who resisted the idea of extra taxes on the banks was the Czech Republic.
The summit in Brussels also agreed to stress test the EU’s biggest banks to find out exactly the size of their losses as a result of the financial crisis, and say it will be published in July.
The fact that nobody is sure of the amount of trouble each bank is in has contributed to the markets nervousness and exacerbated the problems, according to analyists. The US carried out and published the results of its larger banks early in the crisis.
Ireland, too, tested the banks which led to the massive recapitalisation being undertaken at present.
Spain has said it will publish the details for all its banks later this month, putting pressure on others to do likewise.
And yesterday evening the German Finance Minister Wolfgang Schaeuble asked for new and comprehensive stress tests according to his spokesperson adding that they have "nothing to hide".
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