“Momentum building” on Tobin tax

Oxfam’s Head of Research Duncan Green sets out today on his blog how “momentum is building” for a Tobin tax, particularly in the United States.

He writes:

“In the US House Speaker Nancy Pelosi expressed qualified support on the [Financial transaction tax] on the 7th December, while various heavyweight economists have come out in favour, including Paul Krugman in the New York Times.

A democratic congressman, Peter Di Fazio has introduced a bill in Congress calling for a tax on financial transactions, to help pay for job creation in the US. This is supported by 25 other congressmen … In response Treasury Secretary Tim Geitner moderated his initial opposition to an FTT, saying merely that ‘he has not seen a version of this tax that would work for the US’.”

Coordinated global action would allay the fears of leading opponents. James Barty, head of strategy at a London-based hedge fund, writing today in the Financial Times says:

there is concern that the government is more focused on punishing the City than truly reforming the system … the prime minister is proposing a version of the Tobin tax. It does not make London appear welcoming.

Aside from the United States, the remaining opposition appeared to be coming from the International Monetary Fund (IMF). But the Wall Street Journal blog outlined last month how the IMF’s views were changing:

the IMF’s deputy managing director, John Lipsky, gave the IMF’s fullest account of what the Fund is up to. While specific proposals aren’t expected until the spring, he was open to the idea of a so-called Tobin tax — a small tax on foreign exchange transactions.

IMF Managing Director Dominique Strauss-Kahn initially dismissed the idea of a Tobin tax, but after the U.K. and others countries objected, the IMF has made clear it will examine the idea.