Tobin Tax Debate Continues As WTO Opens Ministerial Talks

by Amanda Banks, Tax-News.com, London

08 November 2001

A report co-written by anti-poverty charity, War On Want, and think tank, the New Economics Foundation has been released this week claiming that a 'small, simple' tax on the global currency market could eliminate the worst of global poverty.

Debates over the Tobin tax have been raging for some time now. In September, the Belgian presidency of the EU asked the European Commission to produce a report on the pros and cons of the Tobin tax on financial transactions as part of a wider study of the impact of globalisation.

French Prime Minister Lionel Jospin recently spoke out in favour of the Tobin tax as a way of offsetting any negative fallout from globalisation; then he and German Chancellor Gerhardt Schroder agreed to put the issue on the ECOFIN agenda. However, most finance ministers and economists have been against the tax, saying that what might have been appropriate in 1972 when it was first mooted by Professor James Tobin, it simply wouldn't work in today's liberalised global markets.

But just this week, French Finance Minister Laurent Fabius voiced his support for the tax and proposed that it be implemented with other taxes such as a duty on the international arms trade or a levy on carbon emissions. Such taxes would work twofold by leading to 'less poverty and more regulation,' he said. 'These levies, which aren't mutually exclusive, could be examined at the March 2002 United Nations conference in Monterey to discuss global governance and development strategies,' he told the French daily newspaper, Liberation.

The War On Want/New Economics Foundation report, known as the Robin Hood Tax Report, claims that such a currency transaction tax could help solve two of the world's greatest problems: the instability in the global economy and the yawning gap between rich and poor countries.

Even set at a fraction of 1 per cent, stated the charity, the revenue from the tax could raise over $300 billion which is more than enough to cover the amount needed to meet the United Nations development targets set for 2015, as well as helping to stabilise global capital flows.

Steve Tibbett, War On Want's senior campaigner, said: 'The money raised from this tax could put flesh on the bare bones of endless promises to tackle global poverty.'

Andrew Simms, head of the global economy programme at the New Economics Foundation added: 'Rather than ending poverty, aid and trade have caused many social and environmental problems. We need to find new, more reliable solutions. A "Robin Hood" tax on currency transactions would be an automatic and politically painless way to help pay for international targets on sustainable developments. The money markets can easily afford it and technology can deliver it.'

The release of the report co-incides with the opening of the World Trade Organisation ministerial meeting in Qatar this week and campaigners from the War On Want charity intend to lobby the talks.

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