Flaherty says transaction tax unattractive

Sat Nov 7, 2009 1:02pm EST
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By David Milliken

ST ANDREWS, Scotland (Reuters) - Proposals for a tax on financial transactions to fund the cost of future bank bailouts are unattractive, Finance Minister Jim Flaherty said on Saturday.

British finance minister Alistair Darling said at a G20 meeting of developed and emerging economies that the UK would back such a plan if it received broad international support, but Flaherty and U.S. Treasury Secretary Timothy Geithner were skeptical.

"It's one of the ideas that's on the table, but is not particularly attractive to me as finance minister of Canada. We have been a government that has been reducing taxes," Flaherty told a news conference after the summit in St Andrews, Scotland.

Flaherty also said that a sharp rise in Canada's jobless rate in October, which caused the Canadian dollar to weaken on Friday, simply confirmed the fragile economic situation.

"The job numbers don't surprise me. This (recovery) is fragile, as I was hearing again in the room today. This is not a time for bullish confidence."

Bank of Canada Governor Mark Carney, who also attended the summit, said the latest unemployment data had to be taken in the context of more positive housing, retail and autos numbers.

"If you take the sum of that, it suggests a somewhat softer third quarter. But again the profile of the recovery with growth strengthening into the third quarter and 2010 remains in place," he told reporters.

"But I would underscore what we have said before, that the recovery remains nascent and that the profile the Bank has is more modest than in past recoveries, even if it is stronger than in other countries," he said.

(Reporting by David Milliken)

<p>U.S. Treasury Secretary Timothy Geithner (L) talks to Canada's Finance Minister Jim Flaherty at the G20 Finance Ministers meeting at a hotel in St. Andrews, Scotland November 7, 2009. REUTERS/Andrew Winning</p>