Finance Minister Jim Flaherty repeated Thursday that Canada will not support a proposal from the International Monetary Fund for a bank tax to protect against financial sector meltdowns.

Flaherty spoke to reporters on the eve of the G20 meeting of finance ministers and central bank governors in Washington, D.C.


From left, Minister of Finance Jim Flaherty, Haitian Finance Minister Ronald Baudin, U.S. Treasury Secretary Tim Geithner, Microsoft chairman Bill Gates and U.S. Agriculture Secretary Tom Vilsack take part in a meeting at the Treasury Department in Washington, D.C. ((Kevin Wolf/Associated Press))

"We're a sovereign country; we can regulate our banks and our other financial institutions as we see fit," Flaherty said outside the U.S. Treasury Building after attending an event on global hunger and poverty alongside Microsoft chairman Bill Gates and U.S. Treasury Secretary Tim Geithner.

"As finance minister of Canada, I am not going to impose a tax on our banks that performed well during the financial crisis. It seems to me a very odd thing to do, to punish our banks who got the job done admirably."

The IMF has proposed the tax, along with tighter regulation of the financial industry, to reduce the risk of another global financial disaster.

"Our belief is the tax system can help to reduce the likelihood of future crises," Dominique Strauss-Kahn, the head of the IMF, told a news conference Thursday.

The idea is to tax bank borrowing in order to build up a fund to be used for future bailouts of troubled financial institutions.

The bank levy is expected to be a hot topic at the G20 meetings that begin Friday.

The U.S., the U.K., France and Germany support the tax, but Flaherty has said it's not only unfair, but could increase instability by reducing banks' capital.

With files from The Canadian Press