Flaherty pans call for financial transactions tax

ST. ANDREWS, Scotland—Finance minister Jim Flaherty has dismissed the idea of imposing a tax on financial transactions to guard against another crisis in the banking sector.
Britain called on the Group of 20 countries Saturday to consider such a global financial levy that would act as an insurance fee on transactions or contingent capital arrangements.

Prime Minister Gordon Brown said it was time to discuss whether the world needed a “better economic and social contract to reflect the global responsibilities of financial institutions to society.”
Flaherty, speaking after the meeting, said the discussion is worthwhile, especially in light of the taxpayer bail-outs of financial institutions in Britain and the United States.
But he added the idea is “not particularly attractive” to him because the Conservatives do not want to raise taxes.
Brown told the G20 finance minister’s meeting in Scotland that Britain would not act alone, and that any measures must be implemented by all major financial centres.
Germany’s former finance minister also is in favour of the idea.
But Flaherty was unmoved.
“I think the concept is sound,” he said. “It’s [just] not particularly a priority in the Canadian situation since we have not had any of our financial institutions fail.”
Both the minister and Bank of Canada governor Mark Carney also addressed the bleak outlook in the job market. On Friday, Statistics Canada released new data that showed the country lost 71,000 jobs last month.
The October figure was the third major economic indicator that has surprised well to the downside since the Bank of Canada declared the recession over in July.
Carney denied his prediction was in danger of becoming a forecasting embarrassment.
The data was always expected to be “choppy,” he remarked.
“But I would underscore what we have said all along, that this recovery is nascent and the profile that the bank has is more modest than recoveries have been in the past, even if it is stronger than in other major economies,” Carney noted.
It is one of reasons that it’s important to keep pumping stimulus into the economy, Flaherty added.
“The jobs numbers don’t surprise. As I said the other day and I’ve been saying for months, jobs are likely to lag the recovery of the economy, and that’s unfortunate,” he said.
Finance officials from other G20 countries pledged Saturday to maintain emergency support for their economies until recovery is assured.