Global institutions lurching towards Sherwood
Peter Bakvis, who runs the global unions office in Washington DC, was at the annual meetings of the International Financial Institutions (IMF and World Bank) in Tokyo last weekend, and reports here on developments in the global campaign for a Robin Hood Tax. As EU governments (11 so far) commit to introducing a Financial Transactions Tax (FTT), global economic institutions like the IMF and the OECD are following their lead. Will the governments still refusing to implement an FTT follow their advice?
Some 200 participants met in Tokyo on 11 October, one day prior to the IFIs’ annual meetings (12-14 October), for an “International Symposium on Innovative Financing Mechanisms and Financial Transactions Tax”. The meeting was co-sponsored by the Leading Group on Innovative Financing for Development and a Japanese CSO coalition, and was attended by ministers attending the IFI meetings, parliamentarians and representatives of several civil society organisations that advocate for the FTT, including trade unions. The International Trade Union Confederation (ITUC) was among the organizations with a speaking role. Public Services International, whose Japanese affiliates were among the organizers of the symposium, provided a report.
The Japanese organizers of the symposium released a “Global appeal for implementation of innovative financing mechanisms including financial transactions taxes” at the conclusion. The 12-paragraph declaration, which does not seem to be posted yet on the web, highlights recent advances towards adoption of the FTT in Europe and includes the following statement:
“There is potential on the FTT because revenues from the FTT can be utilized not only as financing for global issues such climate change and development but also for national issues such as supplementing national budgets and, at the same time, as means to control speculative short-term transfer of funds as regulatory measures for the financial sector.”
At the IFI annual meetings themselves, IMF chief Christine Lagarde, who has not been favourable to the FTT since becoming head of the Fund last year even though the IMF’s Fiscal Affairs Department has produced detailed studies demonstrating its feasibility and revenue-generating potential, has finally adopted a more positive stance. She told a gathering of CSOs on the evening of 11 October that the recent European initiative on the FTT was “clearly a good move”:
“As you know, the European members, actually 11 of them within the Eurozone, have decided to approve the financial transactions tax, which is something that many of you are keen on as well and see the benefit of…. We at the Fund regard the financial activity [tax] as more efficient and not as likely to give arbitrage opt-out and loopholes… Having said that, this is clearly a good move. Whether it is complemented by others joining the fray remains to be seen, but it is certainly a good step in the direction of making sure that the financial sector contributes more to the services that it benefits from.”
Lastly, Pierre Habbard, ITUC economist, reports that at a meeting this week with trade unions, business groups and a few government representatives, Jorgen Elmeskov, Head of the OECD Economics Department, said that there was value in creating an FTT for the purpose of redressing market failures, mentioning the over-the-counter (OTC) derivatives markets. Although that was clearly a personal opinion, it does mark a change in attitude from within the OECD (and from Elmeskov himself). The Economics Department is very influential within the OECD and it is one of the directorates most directly concerned by any discussion on financial sector taxation, together with the Tax directorate (CTPA) and the Financial and Enterprise directorate (DAF.) The DAF has already moved toward a more positive attitude on the FTT (but only for regulatory purpose and specifically for the OTC market, not for revenue-raising.) A year ago Adrian Blundell-Wignall, second in command at the DAF suggested the creation of an “OTC Derivative Transaction Tax.” With ECO now joining DAF, the CTPA remains the last bastion within the OECD opposed to the FTT (or to even engaging discussion on the topic).