Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Sweden's Finance Minister Anders Borg, right. (Virginia Mayo)
Sweden's Finance Minister Anders Borg, right. (Virginia Mayo)

EU urged to adopt bank supertax Add to ...

Sweden's finance minister has called on his counterparts in Europe to follow U.S. President Barack Obama's lead with a supertax on banks to recoup the costs of propping up the industry.

Mr. Obama proposed last week that Wall Street pay up to $117-billion to reimburse taxpayers for the financial bailout, as he slammed "fat cat" bankers for making massive profits and "obscene" bonuses.

More Related to this Story

"We cannot accept a situation where the bankers are running away from the bill," Sweden's Anders Borg told journalists on Tuesday ahead of a meeting of European Union finance ministers.

"I think there is support among several of my colleagues for this idea," said the 42-year-old economist. "We had been worried about the competitiveness of Europe. But if this is introduced in the U.S. (that is no longer a concern)."

The suggestion from Mr. Borg, who helped hammer out compromises on some key areas of financial reform during Sweden's recent term as European Union president, will carry weight in EU circles.

In a letter delivered to Elena Salgado, the Spanish economy minister chairing Tuesday's gathering, Mr. Borg outlined how a European supertax or levy would follow the U.S. model or that already introduced in Sweden.

Sweden has embarked on a mission to gather up to roughly 75 billion Swedish crowns ($10.6-billion) from its banks that will then be set aside in a fund to cope with any other financial crises.

The northern European country opted for a direct levy on bank loans rather than imposing a tax on transactions - such as buying investments - because a similar move after the country's 1990s banking crisis backfired.

"We had a transaction tax," Mr. Borg said. "Basically, the transactions moved to London. But you cannot move your balance sheet."

Britain's opposition Conservatives, who are widely expected to return to power at national elections this year, have voiced support for the Swedish idea.

The International Monetary Fund (IMF), a lender of last resort, is working on proposals for a crisis levy on banks. The subject will be discussed at a meeting of the Group of Seven top industrial countries, the World Bank and the IMF in January.

But Jean-Claude Juncker, who chairs meetings of euro zone finance ministers, has said that although he favours Mr. Obama's approach it may be difficult to copy in Europe.

France and Britain's current government have been reluctant to go beyond their planned tax on bonuses.

"This is a tax or a fee which can bring substantial revenues for dealing with the public finance situation," Mr. Borg said. "It is not a transaction tax but a tax on the balance sheet."

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular