By Katarina Sehm Patomäki, NIGD
July 2004

On the first day of this month, on Thursday 1 July, the Belgian parliament passed on legislation for a currency transaction tax (CTT). The Belgian law is in its technical parts based on the Draft Treaty for a Currency Transactions Tax (NIGD Discussion Paper 1/2002) developed by Professor Lieven A. Denys from the Free University of Brussels and Professor Heikki Patomäki from the University of Helsinki.

According to a press release by War on Want (UK), this really is a breakthrough – the Belgian legislation is a testament to the feasibility of the CTT proposition we have been arguing for. A Tobin Tax can raise billions of Euros towards development assistance that could benefit the lives of millions of people.

This legislation is in line with the earlier voting of the Canadian Parliament, back in spring 1999. Groups such as the Halifax Initiative of Vancouver played important roles in this process. On 2001, much thanks to lobbying by Attac France, the French National Assembly adopted an amendment to its (number 2002) Finance Law on a currency transaction tax on condition that other EU countries adopt similar laws. Soon thereafter, also the German government (Ministry of Development) commissioned a study on the feasibility of a tax on foreign currency transactions. The study was done by Professor Paul Bernd Spahn and presented in January 2002. In addition, the European Parliament had its Intergroup on foreign currency transaction (which was later transformed into a more informal group) in the last legislature, where also several Green/EFA members participated.

Another interesting development is reaching us from Brazil. According to Teivo Teivainen, during the first months of 2004, including the UNCTAD meeting in São Paulo in June, Brazil's president Lula da Silva has repeatedly suggested the need for a tax on speculative financial transactions, especially those conducted in international 'tax havens'. The governments of France and Chile have apparently decided to support the initiative. The initiative might lead to a democratizing reform of transnational financial markets. This could also turn out to be an issue around which critical civil society groups and democratically minded governments could find ground for increasing cooperation in order to advocate global taxes.

In Europe, according to War on Want, in the light of the progress in Belgium, the Tobin Tax Network is seeking a commitment from all European Parliaments to introduce a CTT at the earliest possible opportunity and urge other OECD countries to do the same. However, according to Heikki Patomäki, it seems clear that it is politically impossible to get the CTT accepted through the EU institutions. Indeed, we have not seen any scenario indicating how the CTT could come about through the EU. With the right-wing slide in Europe, and in the absence of a major new financial crisis, even the European Parliament may be more reluctant than previously to support the CTT. Moreover, we know that the EP is not a legislative body. It can only recommend or support the CTT, nothing more. Even if it were a sovereign legislative body like the parliaments of nation-states once perhaps were, you would nevertheless need also a government to support and implement the initiative (cf. the experiences of Canada, France and now possibly Belgium).

In the EU, the closest thing to a government is the technocratic European Commission, which is fully committed to the neoliberal vision of the common good of Europe. The Council of Ministers is not that different. Therefore, it is possible to continue to push the CTT in the EU for the next ten years without any real results. At best we may have partial victories in one body or another, but never the tax itself! The only real way forward is an international treaty by a global coalition of willing states. Any EU-member could join at any time, committing also the successive governments to implement it.

The Currency Transaction Tax (CTT) – popularly known as the ‘Tobin Tax’ after the economist James Tobin, who originated the idea – would both raise substantial sums for international development and also prevent financial shocks caused by predatory speculation. Some organizations have now decided to devote the next six months to preparing for the launch of a new global CTT campaign (2005-2008). Among the initial organizations are Attac Ireland, Attac Finland and NIGD. At the European Social Forum in London, Attac Denmark, Attac Finland, Attac Ireland and NIGD are holding a seminar where the details of the global campaign documents will be discussed. For more information and to signal interest in joining the campaign please contact Ruby van der Wekken at nigd@nigd.org.

Once all EMU-countries have signed and ratified the treaty, it would enter into force. By that time – realistically, in six to eight years – there should be at least 60 other countries participating in the new CTTO, most of them from the global south.

Moreover, it is important to stress that we are not simply advocating a new way of raising funds to complement the existing development aid, whether bilateral or multilateral. Fund raising for development aid would only serve to give more leverage to the Western powers – the US, the EU, the UK – to force the developing countries to implement structural adjustment programs (in their various guises). Even the UN system is now very much part of that power structure. What we need is a global tax with a democratic organization deciding upon the tax revenues.