A tax with solutions to global challenges
In praise of a financial-transactions tax.
For the past year and more, the possibility of a financial-transactions tax (FTT) has been the subject of discussion and contention between EU institutions and member states, as you have reported (for one example, see: “Schulz blasts Šemeta over financial tax stance”, European Voice.com, 8 March). Readers who have been following the issue on your pages should be made aware that the idea is now reaching a critical stage, with the French Assemblée Nationale and the German Bundestag today holding simultaneous sessions on a joint French-German initiative for the FTT, six days ahead of a discussion by EU finance ministers (15 June).
The Franco-German initiative should be welcomed, as a strong push by leading countries is urgently needed to convince sceptical EU governments, such as the Netherlands and the UK, as well as the European Commission, to support a tax that is clearly in the interests of the EU.
This tax is not tax-man’s jargon. It is not something theoretical and abstract. Nor is it a tax that will touch the wallets of ordinary people.
This tax is different and is likely to hold some solutions to current global challenges. A small tax on speculative financial trading would contribute to stabilising financial markets. It could also help to tackle climate change, if – as we, an international alliance of Catholic development agencies, propose – some of its revenues were used for climate action. It is estimated that the FTT, introduced at an average rate of 0.05%, could raise over €465 billion each year globally, and €209bn in the EU alone.
Some business leaders suggest the tax is not feasible. This is wrong: studies by both the International Monetary Fund and the Commission have shown clearly that the FTT can be put into practice.
Other naysayers are concerned with the interests and privileges of the financial sector. But what price should be accepted to uphold the privileges of the few who benefit from highly speculative trading?
Climate change is affecting, and will affect, everyone. But it hits the poorest the hardest. When food supply and livelihoods are threatened by floods and droughts, the poorest families, including many women and child-headed households, have little to fall back on.
Governments have long recognised that something needs to be done to stop climate change (indeed, the first world climate conference was held back in 1979). But money has proven to be one of the main stumbling blocks to concerted action.
In theory, this is now being addressed: last December in Cancún, governments agreed to create a Green Climate Fund in the United Nations, which is to receive and distribute up to €70bn a year from 2020.
But, in practice, governments are anxious about budget constraints. An FTT would remove that excuse.
From:
Bernd Nilles
Secretary-general CIDSE (international alliance of Catholic development agencies)
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