Financial Transaction Tax: summing up a week after Brown’s bombshell
It’s been a week since Gordon Brown stole the headlines at the G20 Finance Ministers’ Meeting at St Andrews on 7 November by supporting a Financial Transactions Tax (FTT). Was it all a flash in the pan, or has Gordon taken the debate to a new level? In truth, the campaign for what will probably always be known as the ‘Tobin Tax’ had been on a rising curve for months, but will take some time to deliver. But Gordon Brown’s statement was a major milestone, and he deserves support from progressives for what he did, especially as he has come under predictable fire for doing so.
The TUC put its position on the line this week – as Adam Lent wrote on the Guardian’s Comment is Free website, we believe that a CHAPS tax would be a much better way to bridge the budget deficit created by the bank bailouts than cuts in public services or higher taxes on consumption like VAT.
And we signed up to a broad global civil society consensus letter to the IMF on Tuesday (mentioned obliquely in the Guardian) calling on the IMF to consider an FTT and involve civil society in the discussions of how to make the financial sector pay for the crisis that it was told to undertake by the Pittsburgh G20 Leaders Summit. (Other signatories were the International Trade Union Confederation, TUAC, PSI, Belgian trade union confederation CSC and TUC affiliates the CWU, GMB and the MU, along with US union the SEIU and the Candian Union of Postal Workers – plus bodies like Action Aid, CAFOD and Oxfam.) Development NGOs sprang to Brown’s defence too, in a letter to the FT (not available on the public site).
Predictable assaults on Brown’s speech came from the Financial Times (indeed the paper went completely OTT for days on the subject – methinks they do protest too much!) and many in the financial sector (although they are split, as Adair Turner’s advocacy for such a tax weeks before Brown’s call shows). And clearly the Canadian, Russian and US Governments remain to be convinced – but France and Germany were early advocates and Italian officials have also been positive in the past. The Party of European Socialists, led by Poul Nyrup Rasmussen, have established Europeans for Financial Reform and support an FTT – as do US progressives in Americans for Financial Reform. The much touted opposition of IMF chief Dominique Strauss-Kahn was swiftly watered down by his chief Economist Olivier Blanchard.
This all suggests there is a lot further to go – but we’ve already come a long way in the last week, as War on Want’s John Hilary wrote on Comment is Free. There isn’t even agreement yet on the purpose of an FTT – paying for the bank bailouts, funding action on climate change, paying to end global poverty, or stemming financial sector recklessness. Some have suggested that this confusion is a fatal flaw, but it isn’t – an FTT of just 0.05% would raise vast amounts of money, enough to contribute hugely to several objectives (income tax pays for many different things too, and that’s hardly a fatal flaw!) Even if there is a trade off between raising money and deterring financial recklessness, that’s no problem: it’s unlikely to have just one of those effects, and both are good news.
Particularly obtuse is the argument that an FTT will only work if done globally, because it will encourage global finance to evade the tax by moving location (as if they didn’t already!) First, that’s true of ALL global measures, and it doesn’t stop us arguing for them and, occasionally, winning. But it’s especially ridiculous in terms of FTTs: Britain already has one in Stamp Duty on share transactions, and although it’s set much higher than proposals for an FTT, it hasn’t yet wiped out share dealing in Britain (still, it’s only been around a few hundred years – as Chou-En Lai might have said, it may be too early to tell what the implications are…..)
So, a week after that Brown bombshell, my conclusion about its impact on future financial sector reform is: “a lot done – a lot more to do.”