France mulls bank tax to fund crisis measures

PARIS: France may follow the United States, Britain and Germany

in taxing banks to pay for

aid handed out in the financial crisis, the French finance

minister said today.

Asked on the radio station RMC whether she backed the idea of such a bank tax, minister Christine Lagarde said “yes of course, in principle”, but added that such a tax in France would not be “necessarily exactly like Germany’s. “It’s an idea we have been working on in France

for several months and which we have debated with the

members of the International Monetary Fund,” which is

due to deliver its recommendations next month, Lagarde said.

Germany has drawn up a bank tax aimed at funding bailouts and is due to launch

it at the end of this month. Britain was also expected to

unveil new bank taxes when

the government presents its budget plan today.

US President Barack Obama in January unveiled a plan to

tax risky assets of big American financial institutions to recoup the cost of a bailout of the

sector costing hundreds of

billions of dollars.

France was not forced to directly bail out banks but it

provided tens of billions of euros last year in loans and

guarantees to French banks

and has introduced a tax on bankers’ bonuses.

Meanwhile, French President Nicolas Sarkozy said on Wednesday he was ready to risk provoking a “crisis” in European relations in his efforts to defend EU farm subsidies to French farmers. “I am ready to head into a crisis in Europe sooner than accept that the Common Agricultural Policy be dismantled,” said Sarkozy in his first public speech since his UMP party’s humiliation in Sunday’s regional elections.

“I will not let our farms die.”

He vowed today to push on with economic reforms and threatened a ‘crisis’ in Europe to defend farm subsidies as he fought back from an election defeat that cast doubt on his leadership. “To stop now would ruin everything we have achieved. You trusted me to modernise France. I will live up to my promises,” he said, in his first speech since his right-wing UMP was trounced by the left in Sunday’s regional elections.

Sarkozy appealed to core supporters in business and the countryside, pledging to plow on with his agenda despite the global slowdown.