Factbox: Key points of EU bank levy proposal

BRUSSELS (BestGrowthStock) – The European Commission unveiled a framework for a levy on banks to make them pay now for future crises, setting the stage for a showdown on the tax at a meeting of G20 world leaders in June.

On Wednesday, Michel Barnier, the commissioner in charge of an overhaul of financial services, promised new European Union-wide rules by 2011 to tax banks’ assets, liabilities or profits, raising money for an emergency crisis fund.

Here are the key points from his proposal:

* The aim of the new framework is to ensure EU states take a uniform approach to imposing a bank levy as well as in tackling bank failures.

* The Commission underlines the importance of taking a single approach to bank levies both in Europe and globally.

* “Failure to adopt an EU approach with respect to bank resolution funds could result in the unilateral imposition of resolution levies domestically and thus risk distortions between national banking markets,” officials wrote.

* The levy for banks could be based on a bank’s liabilities, assets, or its profits and bonus payouts.

* The Commission wants to collect money from banks now for future crises. This is different to the approach in Washington, which wants to tax the industry for the current clean-up.

* The money collected is to be used for the winding up of flagging banks.

“The Commission takes the view that bank resolution funds should remain separate from the national budget and dedicated only to resolution costs.”

* The EU executive believes that the scheme should not be extended beyond banks to investment funds, for example.

* Management of the bank resolution funds should be given to the authorities that would be in charge of winding up a stricken bank.

* The European Union executive plans laws on a bank levy in early 2011.

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(Editing by Ron Askew)

Factbox: Key points of EU bank levy proposal