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Belgium introduces Tobin Tax

Jim Jepps


Belgium has introduced a Currency Transaction Tax (CTT, or, Tobin Tax after the radical economist who devised it) which will tax the transfers of large amounts of money in order to help the world's poorest nations. small transactions will be exempt.

David Hillman, coordinator of the Tobin Tax Network, said that "The CTT is a blueprint for the achievement of two substantial outcomes. Firstly, it shows how governments can raise significant income to meet their millennium pledge to halve world poverty by 2015. Secondly, it contains a mechanism to guard against financial shocks that often cause poverty in the first place. Both goals require different tax rates and the Belgian legislation accommodates this by enshrining into law for the first time a two-tier tax,"

Belgium has recognised that for such a tax to be feasible it must operate at a sufficiently low rate for a market which operates on thin margins despite its enormous size, said Hillman. Most commentators have conceded that since the market is electronic and most trading is now centralized through the CLS bank the tax could be implemented effectively at very low cost.

The rate is very low, at 0.02% on all transactions taking place on the stock exchange but the introduction of the principle is extremely important and the money will (should) be used to finance projects in the Third World.

It was the leader of the Flemish socialist group Dirk Van Der Maelen who proposed this measure and this was backed by the socialists, christian democrats and greens. the liberals abstained and the far right voted against.

Der Maelen estimates that this will bring in around 50 billion dollars per year - which is the equivalent of what all the rich countries collectively spent on international aid.

Unfortunately this does not mean that the Tobin Tax is just around the corner. Because Belgium is the first country to vote for the progressive tax they say they will wait for others in the EU to follow suit below implementing the tax.

Despite this severe set back it shows that western governments can find ways of helping the third world. Gordon brown says the the International Financing Facility (IFF) is the only game in town, but this is far from true. governments have pledged to 'halve world poverty' by 2015. This is not going to happen unfortunately, particularly as the main economic players in the G8 are doing nothing to make it happen as measures would act against the interests of big businesses and mulitnationals.
 

 
   

 

 


 

July 2004

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