IMF bank tax proposals tick off one election issue with a minor victory for Labour

- David Worsfold
- 21 Apr 2010
- Indicative reading time: 1 minute

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The leak about the proposed double tax on banks from the International Monetary Fund strikes directly at one of the policy differences between the three main parties in the UK General Election campaign. Although a relatively discreet issue, this topic has already surfaced a couple of times in the campaign.

All three talk in their manifestos about the need to impose a levy on the banks to enable taxpayers to claw back some of the billions that has been poured into supporting them. The Liberal Democrats are the clearest, saying that they would introduce a levy which will remain in place until the banking sector is restructured. By restructured they mean imposing a Glass-Stegall like regime in the UK, separating retail and investment banking. They say they would impose the levy unilaterally.

Labour, on the other hand, stuck to its refusal to support a banking levy unless agreed internationally, which now seems quite likely following the proposals from the International Monetary Fund. The Tories are somewhere in the middle, saying they would impose a levy but would prefer to move in this direction through international agreement although are prepared to act unilaterally if necessary.

I have to admit that I thought the prospects for international agreement on this issue were slight but with the United States and Germany also pushing hard for action it now seems likely that the IMF proposals will win the backing of the G20 finance ministers next week and the European Union shortly afterwards.

Not surprisingly, all three parties moved quickly this morning to support the IMF plans but it has to be Labour who will feel most satisfied as they have been vindicated in their stance seeking globally co-ordinated action.

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