Treasury opposition to Tobin Tax is “bad faith”

Campaigners have reacted with anger to reports over the weekend that the Treasury is blocking German and French plans for a tax on currency transactions – a “Tobin Tax” – which would be used to help the world’s poorest nations. Estimates suggest that $17 to $33 billion could be raised by the tax depending on which countries took part.

The Independent on Sunday yesterday reported that,

“the Treasury is blocking the move, arguing that it would be ‘unworkable’ to get all markets around the world to agree to the levy. Instead governments should give set amounts of aid to Africa and the developing world, Mr Darling believes.”

John Hilary, Executive Director of War on Want, speaking exclusively to Left Foot Forward said:

“All of the quibbles were sorted out three or four years ago. For the Treasury to say that this is impracticable is bad faith. Gordon Brown is being outmaneuvered by supposedly right wing governments in France and Germany.”

The graph below shows how foreign exchange transactions have increased in recent years.

French President Nicolas Sarkozy is expected to urge fellow G20 leaders in Pittsburgh to introduce the tax to reduce risky behaviour by banks. FSA Chair Adair Turner recently told Prospect magazine:

“Such taxes have long been the dream of development economists and those who care about climate change – a nice sensible revenue source for funding global public goods. The problem is that getting a global agreement will be very difficult.”

But a report called “A Sterling Solution” written by Dr Stephen Spratt for Stamp Out Poverty sets out how a Tobin Tax could be introduced on sterling without international agreement.

Rodney Schmidt, principal researcher for the Canadian development NGO, the North-South Institute has estimated that, “a coordinated currency transaction tax of 0.5 basis points (0.005 per cent) on all the major currencies would yield an annual revenue of $33.41 billion … A coordinated tax on just the € and £ together would yield $16.52 billion.” (p.14)