MADRID (Reuters) - European Union finance ministers failed to agree on Saturday how to impose a bank levy, possibly delaying a global accord on taxing the financiers many accuse of causing recession.
Asked about a bank levy, Elena Salgado, Spain’s economy minister who chaired the talks in Madrid, said: “No decision has been made ... We will have to keep talking about types of crisis resolution instrument.”
Pressure is building globally to agree a way to tax banks before a meeting of leaders from the Group of 20 developed and emerging economies in June.
Next week, the International Monetary Fund will present its ideas on a bank levy to G20 finance ministers in Washington.
Although there is broad support for taxing banks in the wake of the economic crisis, political leaders disagree as to how it should be done and how the money raised should be spent.
While the United States wants a bank levy to pay for the clean-up of the financial crash, many European countries would use the money for establishing emergency funds to cope with future crises.
But there is also widespread disagreement within Europe, which will further complicate global negotiations. Some countries want a levy to repair public finances, while others would channel it into funds to wind down struggling banks.
Britain’s opposition Conservative party, which has a narrow lead in opinion polls ahead of a general election in May, would use a levy to pay for a tax break for married couples.
Furthermore, many countries are impatient to start a bank levy of their own. The British Conservatives, for example, have pledged to push ahead with a levy regardless of whether the G20 reaches agreement.
And the president of the European Commission has said Europe could pioneer its own bank levy if others dragged their heels.
But on Saturday, many of those who attended the meeting of EU finance ministers and central bankers warned against countries taking a maverick approach.
“What is important is a level playing field,” said Ewald Nowotny, a member of the European Central Bank’s Governing Council.
The president of the ECB sent similar signals. “Let’s avoid financial nationalism, we are in a single market,” Jean-Claude Trichet told reporters.
Reporting by Jan Strupczewski and Krista Hughes, writing by John O’Donnell, editing by Dale Hudson
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