You headlined your article on the G20’s deliberations on a financial transaction tax “World leaders at odds on financial tax” (EuropeanVoice.com, 4 November).
That may be the case, but it should be noted that a growing group of G20 countries have answered the call of many around the globe who want the financial sector to contribute to the fight against poverty and climate change.
At last week’s G20 summit, France, Germany, Spain and the European Commission remained champions of a financial transaction tax (FTT). Brazil, Argentina, South Africa, Ethiopia, the African Union and UN Secretary-General Ban Ki-moon swung in behind them. The US backed away from its previous objection to European FTTs, opening space for other countries to do so. Leaders, including José Manuel Barroso, the president of the European Commission, made it clear that revenues from an FTT should be used for development.
The ‘Robin Hood tax’, which is backed by Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman and leading financiers such as George Soros and Warren Buffet, is now here to stay. Countries can no longer hide behind the excuse that financial transaction taxes need to be global to work.
As Nicolas Sarkozy, France’s president, pointed out, the ball is now back in Europe’s court. Bill Gates, the world’s second-richest man, is pressurising the Europeans to ensure their FTT is used to help the poor and the planet, and does not disappear into the general EU budget.
It is ironic that the UK and Sweden, world leaders on aid, are blocking a wider agreement that could raise billions to help poor people overseas and closer to home, at a time when aid budgets are shrinking. The UK’s stamp duty is proof that FTTs do not need to be global to work. As for Sweden, they should recognise that the FTT that they implemented in the 1980s failed because, as leading economists argue, it was badly designed.
Oxfam research predicts that aid from rich nations is likely to fall by at least €7 billion by the end of 2012 – the biggest drop in aid for 15 years. In Europe, an FTT of about 0.05% on bonds, shares, currencies and derivatives could raise €210bn every year.
Europe must move first and keep pushing for a global agreement at next year’s G20 summit in Mexico.
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