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Growing impetus for global financial transaction tax

Sunday 28 March 2010 - by Nicola York

Momentum is growing in Europe and the US for the introduction of a financial transaction tax to curtail trading volumes and raise revenues to shore up countries’ budget deficits and fight global poverty.

At a Foundation for European Progressive Studies conference in Brussels in March, the American Federation of Labor and Congress of Industrial Organizations said that over 200 demonstrations were being held in the US over the next few months to raise awareness of the situation.

AFL-CIO chair Richard Trumka said: “I feel very confident we will get something done.”

In Europe, a tax of 0.05 per cent could raise €200bn a year. The political leaders of France, Germany and the UK have all spoken out in support of an FTT, as have leading US economists George Soros, Joseph Stiglitz and US investor Warren Buffett.

UK Financial Services Chairman Lord Turner has also spoken out in favour of the tax.


In a speech to Cass Business School in London in March, Turner said: “We should certainly not exclude the potential role for financial transaction taxes which might, in James Tobin’s words, ‘throw some sand in the wheels’ of speculative activity.”

But Turner did say it may be the case that a “generalised and internationally” agreed FTT is not achievable and cited the fact that many academics have been convinced such a tax should be introduced, only to have failed to promote the idea more widely.

He added: “At the very least we should take financial transaction taxes out of the ‘index of forbidden thoughts’.”

But the European Conservatives and Reform Group criticised the idea of an FTT saying that any financial levy should be to stabilise the financial system, not to raise revenue for unrelated projects. 

The ECR’s economic spokesman Kay Swinburne MEP said: “The EU must not have tax raising powers. Some kind of levy on financial institutions such as the Obama proposal could bear some merit. However, we must not implement an EU solution to a global problem.”

The Party of European Socialists has scheduled a European Action Day on the FTT for 24 April.


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