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Flaherty says no to global financial tax

Canadian Finance Minister Jim Flaherty has poured cold water over a proposal by British Prime Minister Gordon Brown for a global tax on financial transactions to fund future bank bailouts.

Money collected could fund bank bailouts

Canadian Finance Minister Jim Flaherty has poured cold water over a proposal by British Prime Minister Gordon Brown for a global tax on financial transactions to fund future bank bailouts.

"That’s not something that we would want to do. We’re not in the business of raising taxes," Flaherty said after a Group of 20 finance ministers meeting in St. Andrews, Scotland.

"But the principle, the idea, that banks should plan ahead for their own demise and fund that with a living will, or some other concept like that, is a good one and more work is going to be done on that by the G20 finance ministers."

The U.S. also rejected the idea.

In a speech Saturday to the finance ministers, Brown said such a tax should be considered to raise the level of accountability in the financial sector.

"I believe we should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society," Brown told the G20 ministers.

"It cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us," he said.

Brown said a tax on financial transactions would need to be implemented globally.

"Let me be clear: Britain will not move unless others move with us together," he said of the levy, modelled after the so-called Tobin tax proposed by American economist James Tobin in the early 1970s as a way of curbing speculation on financial markets.

Following the talks, G20 finance officials issued a statement in which they pledged to maintain emergency support for their economies until global recovery is assured.

The statement said economic and financial conditions have improved, but it stressed that recovery is "uneven and remains dependent on policy support." High unemployment remains a major concern, the ministers said.

With files from The Associated Press