‘Tax is feasible’ confirms expert group from finance sector and academia
In July, a group of experts drawn from the financial sector (including HSBC, JP Morgan, British Association of Chartered Accountants) and academia (including Columbia, Kyoto and Brussels Universities) confirmed the feasibility of taxing financial transactions as a means of funding international commitments made to developing countries.
The experts handed a detailed feasibility study to a group of 12 governments, who had commissioned the report in November 2009. These governments – including Germany, the UK, Japan, France, Belgium, Norway, Senegal, Brazil, Spain, Austria and Chile – are part of the International Leading Group on Innovative Financing for Development, which is made up of 55 countries. The experts’ report has just been published on the Leading Group’s website.
The experts’ report confirms the feasibility of financial transaction taxes, sometimes referred to in the press as the “Tobin tax”. The Report argues that:
- Foreign exchange transactions between financial institutions are already all processed via high-security international computer systems, and that these systems already collect per-transactions fee on these interbank exchanges. Because of this, the foreign exchange market is the easiest from which to collect a tax.
- Introducing a micro-tax of only 0.005% on these transactions between banks would suffice to raise 33 billion USD per year.
- Common consumers or the real economy would not be hit by this tax, as retail costs for foreign exchange are already 100 to 1,000 times bigger than the proposed tax rate and trade in real-economy goods or services represents only 3% of foreign exchange transactions (the remainder is speculation on foreign exchange rates).
The Australian Robin Hood Campaign warmly welcomed the experts’ report on the feasibility of financial transaction taxes.
‘We commend the experts for setting forth a clear path for governments to follow to implement an effective financial transaction tax. The global financial sector today is heavily undertaxed and this tiny tax will go some small way to redress this imbalance,’ said Professor Ross Buckley, a spokesperson for the Campaign and Professor of International Finance Law at UNSW.
‘This 33 billion would provide new resources to help developing countries fight starvation, disease, illiteracy and other challenges, as well as climate change,’ said Prof Buckley.
The Australian Robin Hood Campaign continues to call upon Prime Minister Gillard and her Government to support moves towards establishing a financial transaction tax this year. ‘Amazingly, Australia, with the US and Canada, blocked moves for a global financial transaction tax at the recent G20 meeting. With the release of this report, there is no longer has any excuse for doing so,’ said Prof Buckley.
