Not a lot of Canadians hold great sympathy for the country’s banks, particularly following reports of vast profits. But Prime Minister Stephen Harper makes a strong case on the international stage against taxing them.
There is such a push in other countries. In fact, Harper had a meeting Thursday with British Prime Minister David Cameron to discuss it. They disagree on the issue, with Cameron saying his country would continue to lobby for it.
The basis for the idea is the economic meltdown of the past year and a half. Some countries – notoriously in the United States and Britain – gave banks bailout money courtesy of the taxpayers when they got in trouble. The political leaders justified it as the only way to avoid worse economic catastrophe.
Harper’s point is – and Cameron readily acknowledges this – that the Canadian banks didn’t crumble as some did in other countries. The prime minister says it would be unfair to penalize Canadian banks, which he says have performed better than their international counterparts during the economic turmoil.
No matter how the current debate goes, there is a good chance other countries will push ahead with their own policies. Cameron in discussing it with Harper was looking for the broadest approval he could muster.
Harper notes that support for the new measure is not surprisingly stronger in countries that did have to bail out their financial institutions.
But apart from taxation: during that crash, Canada’s banking system and regulations were held up as a good model less prone to such failures. That should have been a cue for the international community to have a closer look at the Canadian system to see what they could adopt to avoid future turbulence.
The intent of the tax is to provide a cushion in the event of another meltdown. But does anyone believe for a minute that a bank facing extra taxes won’t find ways to get that money through fees on its clients?