GFS LinkedIn
GFS Facebook
GFS Twitter
GFS RSS feed

“Too big to fail banks should pay tax for privilege” says French finance minister Lagarde

Wednesday 12 May 2010 - by Iain Anderson

French finance minister Christine Lagarde has called for institutions that are too big to fail to have to pay for that “privilege”.

Speaking to a Chatham House conference in New York following the recent G20 meeting in Washington, she said there need to be levies that recoup money governments have used to bail out financial institutions, and taxes to deal with the benefits institutions derive from being systemically important.

She said: “These institutions should have a special franchise price. Just as there is no taxation without representation, there is no franchise without consideration, and that may well be in the form of taxation.”

Lagarde also appeared to reject calls for the proceeds of any new bank tax to be ringfenced for specific purposes. She said: “Tax is not a substitute for the core functions of banks.”

She called for banks to continue to expand lending to support the SME business sector in particular. She said each country should have the right to make its own decisions in terms of how the proceeds of any special tax might be used.



She said that 2010 “is going to be much better” in terms of economic growth, and that France looks poised to outperform many other nations in the Euro area. But she added that the expected rates of growth will still be low and there was a need to stimulate global demand.

Lagarde also said Greece would have to do a better job collecting outstanding taxes and cut public expenditure significantly.

She said: “The markets will keep at it and they will keep attacking the Greek finances and the spreads which is the way by which you measure at which rate Greece can borrow, will rise, and people that hold debt will dump what they have.”

She said the Greek situation showed “a clear failure on the part of the regulations and on the part of the appropriate supervisions” dealing with credit default swaps on sovereign nations. She said there has been no transparency and no understanding “of who is trading what and on what basis.”


WHAT DO YOU THINK?
 
Name:
   
Email:
   
Comment:
   
Post as Anonymous
  Display name
   
Please, enter security code
   
 

No comments yet.
INTERVIEWS & FEATURES
What corruption really costs
Heidi Lawson, partner at Chadbourne & Parke LLP, looks at the impact of compliance and corruption on a company's value.

STRAW POLL

Will markets in 2012 have a tougher time than 2011?

Yes

No

Don't know

View results

FIND A REGION world regions