Canadian officials announced a plan to use their nation's influence as host of June's G20 Summit to stop the momentum behind a global bank tax. British Prime Minister Gordon Brown, who has led the charge to implement a global tax on financial institutions similar to the one Obama has proposed for the biggest U.S. banks, broadcasted his confidence that the G20 would agree on the levy this June. Canada, the only G8 country that did not have to bail out its banks, has apparently been rankled by this arrogance and plans to fight the tax in favor of stronger regulation.
Though known for firm and well-coordinated financial regulation, Canada is currently led by a conservative government averse to high taxes. The country's financial institutions have remained relatively stable while their global peers have crumpled, so it's not surprising that they're not keen on contributing to what could become an insurance fund for wobbly banks.
Other countries, however, are pursuing taxes of their own. The U.S. is considering a tax on balance sheets to recoup bailout expenses, while Sweden is levying bank loans to create a financial crisis fund. Another option is a "Tobin tax" on financial transactions and, of course, a tax on bonuses, which was already adopted in the U.K. and France.
Canada's opposition to the tax could create a rift between G20 leaders that would complicate attempts to coordinate new financial regulation. A global tax would indeed have to be global in order to put banks on a level playing field -- if even one major country opted out, it would open the floodgates to avoidance and offshore transactions galore. Resistance from a country with as much financial sway as Canada currently possesses might be a death knell.