Europe says 'No' to US model bank tax

Reports from various European financial capitals reveal that European countries do not want to emulate the US plan to introduce  a tax on bank liabilities to cover the cost of financial bailouts.

US president Barack Obama on Thursday unveiled a plan for what he called a financial crisis responsibility fee  to raise about $90 billion from financial institutions over the nest 10 years to help recoup losses from the Troubled Asset Relief Programme (TARP) and reduce the federal deficit (See: Obama unveils bank tax to raise $90 billion in 10 years).

The tax would hit about 35 US companies and 10 to 15 US subsidiaries of foreign firms, which have more than $50 billion in assets. number of European institutions are expected to be among them. 

Many European governments, such as the UK, Germany, France and Switzerland indicated they would not introduce similar taxes because they do not need to raise as much money, or will recoup taxpayer cash in other ways.

In an interview published in The Scotman today, British finance minister Alistair Darling said that the government would not be matching a proposal announced by Obama for a new fee on major banking firms.

"No, we are not. The Americans are doing something different," Darling told the daily, adding that Britain would recover state aid by eventually selling stakes recently built up in rescued British banks.