Europe seeks 'social' tax on banks worldwide

Europe seeks 'social' tax on banks worldwide

French President Nicolas Sarkozy (L) and British Prime Minister Gordon arrive for a bilateral meeting prior to an European Union summit on Thursday in Brussels. Britain and France urged world leaders to impose a tax on bankers' bonuses, a day after London announced a one-off levy on the much-criticised finance sector benefits. AFP

Leaders of the European Union backed a fresh call by British Prime Minister Gordon Brown, supported by French President Nicolas Sarkozy, for the International Monetary Fund (IMF) to examine a global so-called 'Tobin' tax.

The 27 member states said that an "economic and social contract" needs renewing "between financial institutions and the society they serve... ensuring that the public benefits in good times and is protected from risk.

"The European Council encourages the IMF to consider the full range of options including insurance fees, resolution funds, contingent capital arrangements and a global financial transaction levy in its review."

While the language of a two-day EU summit's draft conclusions erred on the side of caution, the inclusion of the idea -- which has been kicking about since the 1970s -- represents alignment between Europe's three core powers.

German Chancellor Angela Merkel had sought support from fellow EU leaders in September for such a proposal to be taken to a summit of the Group of 20 countries in Pittsburgh, although they refused to back her then.

But Brown sees an "urgent need" for a new deal between banks and society and fleshed out a range of ideas in an article penned with French President Nicolas Sarkozy, aimed at American policymakers.

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