Canadian CEOs and Finance Minister Jim Flaherty say the same thing about the IMF’s proposed global bank tax: Canada doesn’t need it.
A panel of business leaders recently expressed their views on the bank levy in a poll conducted by COMPAS Inc., and most were in favour of the government’s moves to stop the proposal. The tax was suggested by the IMF as a way to force banks to fund their own bailouts in times of crisis, rather than drawing from taxpayers’ pockets. Canada led the pack of countries opposing the proposal, and the G20 has refused to endorse it, but some countries like the U.S., France and Germany are still in favour of the tax.
Respondents to the poll showed their support for Flaherty’s fight against the tax with a mean score of 5.9 on a 7-point scale, where 7 means strongly agree and 1 means strongly disagree. “Canada has very little influence over the banking in other countries, and I don’t think we should pay anything for their bad management practices,” said one respondent.
The CEOs’ biggest reason for opposing the proposal was because they felt that Canada’s system is well run and doesn’t need the bank tax. They gave this factor a mean score of 5.8. Respondents also felt that the reserve fund could actually encourage financial institutions to make bad decisions in the future as they would know they had a safety net in place, and gave this factor a mean score of 5.2. “Any way you look at it, the bank tax is simply a new tax over which the people who pay it – ordinary citizens – will have little or no say over what is done with the money,” said one respondent.
The executives surveyed gave the Harper government high marks for its handling of the issue, with a mean score of 82 on a 100-point performance scale. They also showed agreement, albeit to a lesser extent, with Flaherty’s alternate proposal of an embedded capital tax, where financial institutions could convert debt to equity to aid the financial institution in the event of a crisis instead of using taxpayer dollars. Respondents gave this idea a mean score of 4.8.