This is the title of an International Monetary Fund report for the G-20. Originally commissioned by the G-20 leaders in Pittsburgh in 2009, an interim version was up for consideration by G-20 Finance Ministers recently.

The document recommends that two charges be applied to financial institutions. The first is a fixed levy, determined relative to the risk associated with the institution – a “Financial Stability Contribution”. This might perhaps be linked to the size of the balance sheet. Along with the Financial Stability Contribution there would be a “Financial Activities Tax”, to be levied “on the sum of profits and remuneration”.

An either or approach is not advocated; both would be applied. The document is also fairly strong on the application of charges to all financial institutions rather than just banks.

The financial services tax proposal which surfaces most regularly – the so-called “Tobin Tax” is considered and dismissed. In essence, a Tobin Tax would raise a levy on foreign exchange transactions. This is an inappropriate approach according to the IMF because it wouldn't be focused on the core issues, and the real burden of the tax might ultimately fall on consumers rather than the financial sector.

Lastly, the report strongly urges a coordinated, international approach to the imposition of the levies. It concludes that without the levies, governments might have neither the financial nor political capital to deal the costs of any future support which might be needed.