Late Lunchtime Links: A permutation of the bonus tax could be here to stay

IMF tax proposals have been leaked ahead of the meeting of G20 finance ministers this weekend, and the BBC has obtained a copy.

The IMF is proposing a levy which will apply to all 'financial institutions' (hedge funds included), initially at a flat rate based on total liabilities, and subsequently at a risk adjusted rate. More disturbingly, it's also proposing an (aptly named) 'FAT' (Financial Activities Tax) to be levied on the 'sum of the profits and remuneration at financial institutions.'

If the latter sounds slightly like a permanent bonus tax, this may be because it is.

The IMF is recommending that it falls on profits above a 'normal' level and on 'high remuneration.' It also points out that France already levies something similar, and that precautions will need to be taken to prevent people from becoming self-employed in an effort to avoid the tax.

KBW analysts are predicting that a US-style tax on the size of banks' balance sheets is the most likely outcome of the IMF's proposals.

Over a 10 year period, and based on the IMF's intention of raising 2-4% of GDP through the levy, KBW says this would raise €240-470bn across Europe. No mention is made of the amount to be raised through FAT, although Robert Peston estimates that the combined take of the two taxes in the UK would be anything from 5-10bn.

While money raised by the levy would go towards a financial stability fund, the purpose of the FAT appears to be preventing the financial sector from becoming too large, and removing the current tax advantages enjoyed by banks whose services don't attract VAT. It has absolutely nothing to do with taxing 'FAT cats,' and any connotations of that nature are entirely coincidental.

How the FAT tax came about. (Alphaville)

Darling welcomes the bank tax plans. (Associated Press)

Darling suggests that unanimous backing for tax proposals is not totally necessary. (BusinessWeek)

Trading drives profits at Morgan Stanley. (~NY Times)

Fabrice Tourre has gone underground. (Alphaville)

Fabrice Tourre has been banned from working in London. (Telegraph)

Goldman's U turn on Fabulous. (CityAm)

Goldman won't be being banned from the Treasury. (Telegraph)

Lib Dems want to set up regional stock exchanges all around the country. (Telegraph)

Credit Suisse has chartered a luxury coach to rescue bankers stranded by ash. (WSJ)