“All you want to know about the Tobin tax”

Report on a seminar in Riksdagen (Swedish Parliament), Stockholm, on 14 May 2004, 1-4 pm.

Organiser: The Green Environmental Party (Miljöpartiet de gröna), MP Lotta Nilsson-Hedström and the International Committee of the Parliament.

Presentations:
Heikki Patomäki, NIGD
David Hillman, War on Want
Sony Kapoor, War on Want

Heikki Patomaki, NIGD & ATTAC Finland, heikki@nigd.org.

This intensive seminar was preceded by a pleasant brunch organised by Lotta Nilsson-Hedström, which provided a chance for networking between active Swedish civil society organizations, on the one hand, and NIGD and War on Want, on the other. The seminar itself focussed on making the case for implementing a tax on currency transactions as a unilateral measure by a grouping of states. Everyone agreed that the CTT is techically feasible and relatively easily manageable, and that there are sound economic reasons for it. There was also a consensus on the so-called Spahn-variation of the tax (two-tier tax instead of a simple one-tier tax as originally proposed by James Tobin). The audience of this small seminar of some 20 people seemed to be in agreement with the speakers, at least in this regard.

Different political visions on making the CTT real

However, there is a major difference between two political visions of making the tax real. Whereas David Hillman and Sony Kapoor argued that the most realistic way forward is through the EU-institutions, Heikki Patomäki made a case for a global coalition between a number of Southern and some European states. The Europeanist vision implies that the basic tax rate should be very low; Sony also suggested that the revenues might be much less than what is usually estimated. Moreover, in this political vision, no new global organisations will be created. This may make it easier to sell the idea of the CTT to European governments – London included – than the more radical vision of the Draft Treaty on Global Currency Transaction Tax.

Heikki pointed out that even this watered-down version of the Tobin tax may be impossible to realise through the EU-institutions, at least in the foreseeable future. The Commission and the European Central Bank oppose the tax vehemently, and in the Council of Ministers, any one government can veto a proposal for a European CTT. At the moment, the European campaign focusses on the European parliament, even though the parliament does not have the legislative powers to make the CTT real. There is also a further problem. Even if the European campaign somehow succeeded in turning the odds in its favour, the outcome might be a disappointment. A small unilateral tax, with the revenues controlled by the European Central Bank or national finance ministries, might not make any real difference. Even if the revenues were used to complement existing development aid, we would simply be reproducing the paradigm of charity by the rich, with all the pathologies and relations of dependency that that paradigm implies.

The vision of the Draft Treaty on Global Currency Transaction Tax is simultaneously more realistic and politically ambitious. Any “coalition of the willing” can set up the tax regime, perhaps on the initiative of key Southern states such as Brazil, India or South Africa. Also the EMU-countries can join on country-by-country basis, thus committing the subsequent governments as well. The euro will become part of the system as soon as all EMU-countries have signed and ratified the treaty individually. The treaty establishes a new democratic global organization that will control the bulk of tax revenues. A democratic assembly of national parliamentarians and representatives of global civil society organisations will determine the budget of this organization.

The discussions were intense. The audience as a whole did not take clear stands, yet some participants said explicitly that there is no point in the CTT without a corresponding comprehensive global democratic vision (David and Sony might have interpreted the situation slightly differently).

The discussions will continue in other contexts. Meanwhile, NIGD and ATTAC Finland will proceed with launching the new global campaign.