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DraftCTTCampaign

First draft for comments
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Global Campaign for a Currency Transactions Tax

Why?

Three great problems face the international community. One is the stability and sustainability of the global economy that is, with the exception of China, mostly stagnating and, in some places, in deep depression. The second is the yawning gap between rich and poor and the billions of people whose basic needs for food, clean water, decent housing, employment and education are not met. And the third is the way global finance confines democracy. A single initiative could help solve all three.

A global 'Robin Hood' tax has its unique attractions. First, the effort in setting up the tax is a small price to pay to fend off the huge economic and human costs of global financial meltdown and instability. The slackening global conditions are at least partially due to the re-emergence of global financial markets. Also many of the recent outbursts of violence have to do with the global financial system. Tax havens facilitate networks of tax evasion, crime and terror; the unmanaged struggle between euro and dollar seems to have been one of the reasons for the attack against and occupation of Iraq; and the worsening economic situation enflame conflicts and generate neo-imperial responses.

The time for a tax on international currency transactions has arrived. It is an elegant solution to the global problems of stability, efficiency, justice and democracy. The once distant dream of a concerned few has been turned into a politically feasible and technologically possible project. The academic case has been made and is sound. The task is now to overcome remaining political obstacles for this particular reform, which should be seen as a step in a larger reform process.

Second, the currency transaction tax is the simplest solution to how the world can pay for sustainable development and a long list of unmet pledges to eradicate poverty. Global aid resources have declined. In the UN Millennium Declaration, the ruling cadres of the world set itself the challenge of meeting some of the most basic human needs by the year 2015, but did not say how to pay for them. A currency transaction tax can raise the needed funds. At a stroke, years of potential political wrangling on who should pay, how and why, can be avoided.

Third, the currency transactions tax defends also the autonomy of national economic policies. This means increased democratic self-determination of economic policies.

However, the real worry may be not only about the autonomy of states. The real worry may also be about people whose lives are transformed by the consequences of financial outcomes and who do not have a say on financial developments. Democratisation also concerns empowerment of the powerless, to realise equal, practically effective rights of every person to take part in collective self-determination. Attempts to tackle global power relations give rise to novel questions about democracy, including democratic control over global finance. Hence, the currency transactions tax opens up a discussion about global democracy.

Why now?

In connection to major financial crises of the 1980s and 1990s, many voices have been raised in favour of a tax on currency transactions. After the Asian crisis, a global movement for the tax emerged. The movement has managed to raise the issue on the agenda of many national parliaments, the European Parliament and a number of international organisations, including the UN. The parliaments of Canada (1999) and France (2001) have adopted motions supportive of the implementation of the tax. A similar law was defeated in the Belgian parliament by just one vote in summer 2003 and successfully reintroduced in spring 2004. A number of governments, also in the global south, have mentioned a currency transactions tax, CTT, in their programmes or made statements in its favour, including those of Brazil, India, and South Africa.

Although the movement for the �Tobin tax� has successfully campaigned for the tax in various countries, it has not achieved its main aim, i.e. a global currency transactions tax. In fact, the same is true of the so called alter-globalization movement as a whole. Although the movement has succeeded in resisting or postponing a few neoliberal reforms, it has not been able to realise a single reform of the world economic governance of finance, trade or production. The currency transaction tax is a key reform that is, for good reasons, high on the agenda of this movement.

We should not wait until the next major financial crisis, which can be more severe than anything we have seen thus far. The time to make the tax real is now.

What?

The aim of the campaign is twofold. Firstly, we want to raise the issue of currency transactions tax as a top priority on the political agenda. Secondly, we want to invite and push governments to sign the finalized treaty on currency transactions tax.

A tax on currency transactions has evolved from a mere campaign tool into a serious issue on the global political agenda. It is time to take a step further. This campaign is based on a draft treaty for a currency transactions tax that combines the several proposals presented in various forms during the latest decades.

The Draft Treaty

The potential of the CTT (�the Tobin tax�) depends on the way it will be realised. The tax has three main aims:

(1) To curb foreign exchange markets and thus transnational flows of short-term capital. Thereby the tax will stabilise financial markets and increase the economic policy autonomy of states. This will increase also economic efficiency and well-being.
(2) To create global funds for preventive and compensatory mechanisms, and more generally, for global common goods.
(3) To gain democratic control over global financial markets and the social forces they have helped to unleash and strengthen.

Many visions of the CTT focus on only one of the aims of the tax, thus excluding other concerns. James Tobin�s original 1972 proposal was only about stability and autonomy of states (1), leaving (2) aside as an uninteresting by-product. Tobin had virtually nothing to say about (3). Some economists have followed Tobin in this regard. Many later proposals have only been interested in creating global funds (2) and imply such a low rate of taxation that the volumes and functioning of foreign exchange markets would be left practically intact. Also many recent proposals to establish a stand alone CTT by the European Union would not achieve the three basic goals. There would be no global fund or global democratic control of financial markets. If developing countries were invited to join the regime subject to acceptance of the control of the Commission or the European Central Bank, the CTT regime would come close to reproducing (neo)colonial structures of finance.

The draft Treaty incorporates all the main aims of the tax. The tax base is defined as comprehensively as possible. In our proposal the tax rate is set at a modestly high rate (e.g. 0.1%). The tax itself is modified. A two-tier system of tax, following the well-known Spahn model, confiscates windfall gains from over-speculation through the trigger of a higher tax during times of exchange rate turbulence. The tax is collected on a national basis, and the states will keep part of the revenues. However, the bulk of the OECD countries� revenues will go automatically to a global fund.

A further problem is that the CTT Organisation, CTTO, has to be capable of learning and self-transformation.

The CTTO has to be open to different points of view; react rapidly to unexpected changes; and qualified to assume new tasks if needed. Moreover, there has to be a fair, transparent and accountable process whereby decisions concerning the allocation of funds can be reached. Only an efficient and open democratic organisation can meet these requirements. On the positive side, a CTTO could also stimulate the development of new forms of democratic participation and accountability in global economic governance, by virtue of its exemplary structure and initiatives.

The CTTO will govern the tax and control the global fund. It consists of a Council, a Permanent Secretariat and a Democratic Assembly. Three kinds of actors are recognised as stake-holders: governments; national parliaments; and transnational civic actors and social movements, including not only NGOs but also for instance trade unions.

In non-consensual decision-making, the weigh of governments and national parliaments depends on the size of the population of their respective countries. Civic actors take part in decision-making in the Democratic Assembly.

In the first phase, although the regime has to be open for all states to join on equitable terms, there is no need for a universal consensus on the need for the Tobin tax. The proposed Treaty shall enter into force following the 30th ratification of the Treaty, or on the date on which the Preparatory Group has established that the Contracting States who have ratified the Treaty account for at least 20% of the global currency markets, whichever is later. That is, a grouping of countries can initiate the system at any time. The only thing that is needed is a state that is willing to convene an international conference for establishing the CTT and a sufficiently large grouping of states interested in participating.

The result is a consultative document for concrete and detailed discussions. In principle, however, everything is now ready for the first 30 states to sign and ratify the Treaty and thereby to establish the CTTO.

How?

The Jubilee 2000-campaign succeeded in raising the debt issue on the political agenda. The campaign was supported by over 24 million signatures.

Inspired by the success of the Jubilee campaign, we have set up this CTT-campaign to be composed of three elements:

1. It invites comments on the Draft Treaty. At www.currencytransactionstax.org, you can comment on the text of the Draft Treaty.
2. It invites individuals, political organizations and states to sign a letter of support of the CTT and the Draft Treaty. At www.xxxxyyy you can enter your signature in support of the tax and the vision of the Draft Treaty.
3. It prepares the Currency Transactions Conference planned for 2008. The Draft Treaty will be discussed and developed in the conference and subsequently turned into a Treaty which governments are invited to sign.

The campaign also provides a framework where a maximum number of organisations and individuals are encouraged to further the campaign with their own target groups.

By whom?

The campaign invites all organisations that work in favour of a Currency Transactions Tax to take part in the activities and in encouraging people to sign the appeal. Among the launching organisations are Attac Brazil?, Attac Finland, NIGD�

When?

The Campaign will be discussed at civil society forums, beginning at the civil society forum of the UNCTAD XI conference in Sao Paulo on 13-18 June 2004. In late 2004 we will launch the framework for the campaign, within which the organisations will conduct several focused campaigns and lobbying activities. Within the frames of the campaign the organisers will host events at the World Social Forum and its events to get comments on the Draft and to invite signatures for the campaign. The signatures will be handed to the UN General Assembly 2008 and to the G8 leaders at their meeting the same year.

The main point, however, is to invite a government or a group of governments to organise a large-scale conference to discuss and finalise the Treaty.

It is much easier for a government to take the initiative if it knows that it is being supported by dozens of other governments, thousands of political organizations and millions of people around the world.

The NIGD

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