UK Gives Impetus to Global Banks Tax

ST ANDREWS, Scotland (Reuters) - Britain urged world governments on Saturday to consider a levy on banks to fund future bailouts, departing from long-held opposition, though there was little sign of the consensus needed to make it fly.

British Prime Minister Gordon Brown raised the idea at a weekend meeting of Group of 20 financial leaders in Scotland -- ending London's resistance to such moves on behalf of its huge financial sector.

The United States, key to the success of any global initiative, rejected a tax on day-to-day transactions, though it left the door open to other ways to protect taxpayers from losses. Canada was also lukewarm.

"A day-by-day financial transaction tax is not something we are prepared to support," U.S. Treasury Secretary Timothy Geithner told reporters.

"This idea (of a bank transaction tax) has been around for a long time ... I think frankly the experiences are mixed."

In a briefing later, though, he also signaled the United States would engage in work to seek ways to recoup the costs of future bailouts and protect the economy and important institutions like pension funds from banks' losses.

"I think it's fair to say that this view is shared by many countries that we need to build a system in which tax payers are not exposed to such risks in future," Geithner told reporters.

British Prime Minister Gordon Brown joined earlier calls from France and Germany in saying it was time for banks to give something back after governments have poured billions of dollars to shore up the sector.

Brown's intervention took the G20 by surprise though he was careful to list several tough conditions before Britain would actually commit to a new levy, such as full support from all the world's top financial centers, including the United States.

Canada said banks that get into trouble should bear the consequences but a tax may not be the best solution.