Belgium introduces Tobin Tax
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.