A Last Gasp From The Tobin Tax As 2001 Ends

by Jeremy Hetherington-Gore, Tax-News.com, London

28 December 2001

In 2001, any politician wanting instant attention from the media (and instant condemnation by economists everywhere) just had to suggest the introduction of a Tobin Tax in order to stop globalisation and save the world. So the year is ending in the same vein, with the French Socialist Party and some lunatic fringe Belgian Deputies both clambering on board the Tobin train while there is no other news for journalists to write about.

25 years ago, Nobel Prize winning economist James Tobin wanted to introduce a very low tax on speculative capital movements so as to avoid major currency fluctuations, but even he now agrees that the tax would be ineffective given the footloose modern foreign exchange market.

'Democratic globalists' as political anti-globalisers call themselves, have adopted the tax mainly as a means to redistribute wealth. Its proceeds would be spent on development aid.

The French Chamber of Deputies has approved a tax of no more than 0.1% on financial transactions, but don't worry, there is no chance of the Government adopting this proposal. Now in Brussels Deputies Dirk van der Maelen (SP.A [Socialist Party -Different]), Leen Laenens (Agalev [Live Differently - Dutch-speaking ecologist party]), and Ferdy Willems (SPIRIT [Social, Progressive, International, Regional, Integrally Democratic, and Forward-Looking]) are presenting a bill today aimed at introducing the Tobin tax. They say that their bill is more ambitious and, above all, more feasible than the one presented by the French Socialists.

The Belgian bill aims at "the introduction of a tax on foreign currency, bank note and coin exchanges" at a very low rate of no more than 0.01 or 0.02% to be levied on all transactions and a very high rate of up to 80% to be levied when exchange rates 'threaten to explode'.

Let's hope that the Tobin tax will die with 2001 and that madcap politicians will come up with some other silly wheeze we can write about in 2002 . . .

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