I’m not making this up. The Vatican has come out as the latest supporter of a financial transactions tax (FTT) after campaigners engaged in dialogue with the Pope’s officials in Rome ahead of the G20 summit next week.
This morning at a press conference in the Vatican City Cardinal Peter Kodwo Appiah Turkson (President of the Vatican’s Justice and Peace Council), Msgr. Mario Toso (the Secretary) and Prof. Leonardo Becchetti (Professor of Political Economy, Second University of Rome and member of the Scientific Committee of Zero Zero Cinque, the Italian Robin Hood Tax campaign) presented the Pontifical Council for Justice and Peace note “For a reform of the international financial system in the perspective of a public authority with a universal jurisdiction”.
On the FTT, the note says:
“On the basis of this sort of ethical approach, it seems advisable to reflect, for example, on: a) taxation measures on financial transactions through fair but modulated rates with charges proportionate to the complexity of the operations, especially those made on the “secondary” market. Such taxation would be very useful in promoting global development and sustainability according to the principles of social justice and solidarity. It could also contribute to the creation of a world reserve fund to support the economies of the countries hit by crisis as well as the recovery of their monetary and financial system; …
The Vatican supports the idea of modulating the level of the tax, as the TUC has always argued, “with costs proportioned to the complexity of operations, especially of those carried out on the ‘secondary’ market.”
In his contribution to the press conference, Msgr. Toso said:
Consistent with the policy commitment to guide financial and monetary systems towards the realisation of the common good, the Pontifical Council suggests by way of example three possible avenues: a) measures to tax financial transactions; b) methods of recapitalisation of banks; c) separation of ordinary banking/lending functions from Investment Banking.
Prof. Becchetti responded to critics thus:
“Summing up the 4 main objections to a FTT (it can only work at global level ; there won’t be any revenue because of capital flight ; the tax increases the cost of capital ; the tax reduces markets liquidity) these are either false or unfounded either because of the evidence (the first two) or because of lack of evidence (the latter two). From the above a FTT (even though it’s no panacea) can represent an important first step in the [re]balancing of relationships between [political] institutions and finance … to prevent new financial crises and regain the trust from civil society towards financial institutions, which we badly need.”