Source: The Canadian Press

The true flavour of Prime Minister Stephen Harper’s first major summit is starting to emerge.

The G8 and G20 meetings in the Toronto area this June will be tightly scripted, focused and dismissive of new directions — if Ottawa’s reaction to the global banking tax is a sign, analysts say.

“The Canadian government has an agenda and it’s sticking to it,” said Andrew Cooper, associate director of the Centre for International Governance and Innovation, based in Waterloo, Ont.

“Very disciplined, very constrained.”

On Wednesday, Finance Minister Jim Flaherty once again flatly refused to co-operate with any notion of taxing banks, even though the latest overture has come from the International Monetary Fund itself.

The IMF was tasked by the G20 to analyze ways to make financial institutions pay for their own bailouts and rescue packages.

Its interim report, presented to finance ministers this week, recommended at least one tax, and possibly two. The first would target all financial institutions, while the second tax would target bank profits and pay.

All G20 countries should join in, so that banks compete on a level playing field, the IMF recommended.

But while Ottawa supported the process to ask for the IMF study, the government is rejecting the results — in stronger language than ever.

“We believe that Canadian taxpayers should not bear the costs of bailouts of financial institutions in other countries,” Flaherty told a Toronto financial conference, a day before heading to Washington to make the same argument to his international colleagues.

Flaherty said such taxes create an incentive for banks to behave recklessly, since they know they’ll be bailed out if worst comes to worst.

“Let me make that even clearer,” he said. “Canada will not go down the path of excessive, arbitrary or punitive regulation of its financial sector.”

Flaherty’s opposition to the IMF recommendations is notable because Canada is the next host of the G20 summit and has considerable say in the agenda. Proponents of a global bank tax fear Canada will block the initiative.

They’ll likely have to wait until the next G20 summit in Seoul in November to make much progress, Cooper said.

Canadian politicians “seem to be sort of passing it over to the Koreans. And this isn’t the only issue,” he said.

While many of the world’s emerging powers see the G20 as the foremost group for international economic decision-making, Canada is taking pains to make sure its role is defined narrowly.

Ottawa has resisted efforts to have the G20 discuss development issues as well as climate change.

And Harper has made clear that the theme of the Toronto summit is to stick to the agenda already set out in previous summits. He has urged countries not to set off in new directions.

Flaherty framed the proposals for bank taxes in that light.

“More recently, some countries have begun to focus on some additional elements that go beyond what has been agreed in the G20,” he said Wednesday.

Instead, Canada wants the G20 to move ahead with the program agreed to previously, and work on how to bolster capital requirements, strengthen liquidity and discourage leverage.

At the same time, Ottawa is seeking G20 allies in its stand against a global bank tax, with a keen eye on Australia. And it continues to use its stand against bank taxes as a selling point for Canada’s relatively strong financial sector.

“Canada has been widely praised for the health of our financial sector — a system that held its ground under intense pressure,” Flaherty said. “We are determined to strengthen Canada’s rising global position in the future.”

That’s exactly what the IMF warned about in its report to G20 ministers. The fund warned that a global bank tax needs to be applied universally by most major countries, so that banks don’t start shopping around to take advantage of low-tax jurisdictions.

“There’s definitely a comparative advantage that Canada is pressing,” said Cooper.

But Ottawa is not abandoning Harper’s call for countries to engage in “enlightened sovereignty,” said a spokesman for the Prime Minister’s Office.

Harper kicked off the summit season with a speech in January that asked all countries to set aside their immediate domestic self-interests, and agree to act in the common interest of global financial stability.

The IMF made sure its proposal for a global bank tax was framed in that type of language, reminding the G20 members that “none is immune from the risk of a future — and inevitably global — financial crisis.”