India Leads Calls For Tax On Capital Flows

by Lorys Charalambous, Tax-News.com, Cyprus

25 February 2003

Speaking at the weekend ahead of the Non-Aligned Movement (NAM) summit, Indian Prime Minister, Atal Behari Vajpayee once again raised the spectre of the Tobin Tax by proposing the introduction of a levy on capital flows in order to protect developing economies.

Calling upon the 114-member organisation - which was formed during the cold war by developing countries as an alternative to the East and West power blocs - to lead the way over this issue, Mr Vajpayee argued that despite opposition to the imposition of a tax on currency speculation from developed nations such as the United States, the tax would actually be easier to put in place than many of the measures implemented by the US to monitor financial channels in the wake of the September 11 attacks.

'I believe this [levy] is a reform whose time has come,' he announced, explaining that: 'It combines an instrument to protect weak economies from the volatility of capital, ehance investor confidence and generate valuable resources.'

According to the Indian Prime Minister 'even a token tax of 0.25% could generate annual revenues of about $300 billion', which could be put towards a global poverty alleviation fund.

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