The Tobin Tax (kind of a feasible Robin Hood initiative)
Now, I am certainly no economist, but the 'Tobin Tax' has been persistently brought to my attention over the past year and seems to be a fantastic idea that needs to be brought into mainstream awareness. I understand that in our 'virtual' financial market, trillions of dollars change hands every day. I also understand that despite great wealth in the world, thousands of people die from poverty every day. This is lunacy at it's most disgusting level. The Tobin Tax actually seems to benefit our own economies by offering stability, and it is a huge opportunity to generate aid for the third world. Below I will explain the reasoning behind it and the international support that it is receiving. It was talked about a great deal at the European Social Forum which I attended, and my Dad has banged on about it for a while now.
The information below was taken from
War on Want
ORIGIN - Proposed by Nobel-prize-winning economist James Tobin in the 1970s.
Over one trillion dollars ($1,000,000,000,000) changes hands every day on global foreign exchange markets. More than 80% of this trading is speculative – buying and selling money for the sake of profit. It involves financial institutions betting on changes in exchange rates in short periods of time.
An internationally agreed tax on currency transactions would be positive. A Tobin Tax would help calm speculation on markets while simultaneously producing revenue to combat world poverty.
We are only talking about a minimal tax, say 0.1%. This would not hold back productive business transactions for trade and investment, but speculative transactions would be hit harder because they rely on very small margins of difference between currencies.
Presently 84% of all foreign exchange transactions occur in just nine countries. A Tobin Tax introduced in these nine would initially provide a workable regime.
The idea is being considered by the UN and EU. Several national governments have called for it's introduction. It has the support of over 350 economists and 900 parliamentarians around the globe. The Canadian Government are pioneering the idea internationally, and France have agreed to introduce the tax when other EU countries sign up to it. Gordon Brown has said the UK have 'an open mind' to the idea but has been non-commital.
The Tobin tax could fund a huge increase in anti-poverty programmes and provide aid in the form of education, healthcare, food, water and sanitation. Estimates predict that a minimal tax of 0.1%, even after it's calming effect, could provide between $50 and $300 billion a year. This pot of money could be governed and distributed by a new democratic body under the UN. Such a body would have to work transparently, with genuine partners in developing nations.
The Tobin Tax would mean a system with more stability and less poverty.
WINTER 2004 - The Presidents of France, Brazil, Spain and Chile with UN Secretary General, Kofi Annan, have said that: “a tax on foreign exchange transactions is technically feasible on a global level”.
Presidents Chirac, Lula and Zapatero then made a formal declaration on hunger and poverty, saying "the greatest scandal is not that hunger exists, but that it persists even when we have the means to eliminate it. It is time to take action. Hunger cannot wait”.
2005 is an unprecedented window of opportunity for the currency transaction tax to be at the forefront of ways to finance international development as Britain hosts both the G8 summit and the presidency of the European Union.