Time for a Global Campaign on a Currency Transactions Tax!

Mika Böök, Attac Finland, and Katarina Sehm Patomäki, NIGD
September 2004

The Currency Transaction Tax (CTT) - popularly known as the "Tobin Tax" after the economist James Tobin, who originated the idea back in the 1970s - would both raise substantial sums for international development and also prevent financial shocks caused by predatory speculation. A number of organizations have now decided to devote the next six months to preparing for the launch of a new global CTT campaign. Among the initial organizations are Attac Finland, Attac Ireland and the NIGD (the Network Institute for Global Democratization).

The existing draft international treaty on the CTT (visit nigd/campaign.html to download this document) provides this pro-campaign with an important tool. An inter-governmental conference is needed to discuss and agree on the treaty, and to form the new international body, that we for working purposes have called the CTT Organisation (CTTO), for the implementation and administration of the tax.

We find it to be very important to spell out that we are not simply advocating a new way of raising funds to complement the existing development aid, whether bilateral or multilateral. What we need is a global tax with a democratic organization deciding upon the tax revenues. Western powers must not be allowed to force developing countries to implement new "structural adjustment programs" by means of the CTT or the CTTO.

Presently, the Tobin Tax Network (see, for instance, http://www.tobintax.org.uk) follows up the adoption of the Tobin-Spahn law in Belgium by a European campaign for CTT. The idea is to get commitments from members of the national and European parliaments to introduce a CTT at the earliest possible opportunity. MPs in other OECD countries are urged to do the same.

Copies of The Draft Treaty on CTT in English are downloadable via the page nigd/campaign.html. Translations of the Draft Treaty to other languages are in preparation.

The European initiative of the Tobin Tax Network is certainly very welcome. However, we think that it is very unlikely that the CTT will be 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. Right-wing politics support by tradition orthodox economics and the CTT is seen as a way of interfering in the free operations of markets. 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 are supposed to be, governments would nevertheless be needed to support and implement the initiative (this is also the experience of the countries where parliaments have adopted laws or declarations towards the implementation of the CTT, that is, Canada, France and now Belgium).

The technocratic European Commission, which continues to be fully committed to the neoliberal vision of the common good of Europe, has so far not shown interest in introducing the CTT. The same might be said about the Council of Ministers. Therefore, we may go on pushing the CTT in the EU bodies for the next ten years without any success. At best we may win partial victories in one body or another, but we will not have advanced in actually implementing the tax itself.

Our conclusion is that the way forward goes via an international treaty on the CTT by a global coalition of willing states. Particularly encouraging we find the emerging grouping of Brazil, India and South Africa, also referred to as P-3. Important messages regarding setting up a CTT have emerged from these countries. Most recently the Brazilian president Lula da Silva, for instance, has in 2004 repeatedly spoken in favour of a tax on currency transactions. Recent statements from France and Chile flash a promise of support also from them in this question. The perhaps most interesting aspect of the P-3 taking the initiative of a CTT forward lies in the fact that these three countries all represent the global southern part of our planet, and what even more, the countries all represent different continents of the southern hemisphere.

According to the Treaty, in order for it to enter into force it must be ratified by at least 30 countries covering at least 20 % of the currency markets. Any country or group of countries can initiate this “coalition of the willing”, striving at creating a group ratifying the treaty. As regards the EU, any EU member can join the coalition at any time.

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.