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Entries tagged "Financial speculation tax"

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European Victory on Taxing Speculation

October 12, 2012 ·

Cross-Posted with the Huffington Post

European campaigners for a financial transaction tax have done some awfully goofy things over the past three years.

Global Day of Action FTT-Robin Hood Tax/FlickrAt one French demonstration, they stripped down to their skivvies to emphasize the small size of the tax (0.1% on trade of stocks and bonds and 0.02% on derivatives under the European Commission's proposal). In Germany, they rented a limo and crashed the Berlinale film festival, dressed as Robin Hood characters. In many countries, they've gotten elected officials to pose with silly hats and fake bows and arrows.

But after this week, the opponents of the financial transaction tax (aka Robin Hood Tax) will no longer snicker at such antics. At a meeting of European finance ministers on October 9, 11 governments committed to implementing the tax. This is two more than the minimum number needed for an official EU agreement. And it is a huge victory for those of us -- not just in Europe but also in the United States and around the world -- who've been pushing for such taxes as a way to curb short-term speculation and generate massive revenue for job creation, global health, climate, and other pressing needs.

Of course the goofy stunts weren't the only game-changers. Campaigners have also built up strong technical arguments about the feasibility of such taxes. And a growing number of financial professionals have come out in support, blunting the industry backlash.

The broader European crisis has also been a major factor. In fact, there are rumors that Italy and Spain may have sold their support in exchange for some debt concessions from Germany. The additional eight governments in the new coalition of the willing are France, Austria, Belgium, Estonia, Greece, Portugal, Slovakia, and Slovenia. More may join in the coming months.

There are still a few hurdles ahead. There will be a round of negotiations that could result in the European Commission's proposal being watered down by lowering the rates or narrowing the base to only cover securities. There will be a fight to make sure revenues help people and the planet instead of the big banks. And EU heads of state will have to vote by a qualified majority to give the initiative the green light. This means some countries that don't plan to implement the tax themselves will still need to sign off on it. The biggest opponent, UK Prime Minister David Cameron, may have some obstructionist tricks up his sleeve.

But according to Peter Wahl of WEED, one of the key forces behind the German campaign, "there is now quite a strong political will behind the project, so that we can expect definitive implementation rather soon, perhaps already during 2013."

Europe's dramatic step forward can only boost the growing U.S. grassroots efforts for a Robin Hood Tax. Our current Treasury Secretary, Timothy Geithner, has been a naysayer, sometimes even chastising European leaders for considering the idea. But with Geithner heading out the door after the election and Europe moving towards raising revenue off the tax, we may get a blast of fresh thinking.

 

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.
Follow her on Twitter: www.twitter.com/Anderson_IPS 

Emerging Economies Join G20 Coalition to Tax Speculation

November 4, 2011 ·

Talk about piling on. Bill Gates, the Pope, Michael Moore, the Archbishop of Canterbury, 1,000 parliamentarians, 1,000 economists, the world's major labor leaders, Occupy Wall Street protesters, Oxfam and other major development groups, thousands of nurses, the World Wildlife Fund and other major enviros…It might be easier to list who didn't come out didn't come out in support of a Wall Street tax in the lead-up to this week's G20 summit in Cannes.

At an action this week, Robin Hood visited G-20 leaders. Photo and action by Oxfam International.The outcome? No home run, but some measurable steps forward.

No one expected a G20-wide agreement on taxing financial transactions at this summit. Despite rising support, opposition from the United Kingdom, Canada, and the United States, among others, is still just too strong. But there were high hopes that a subset of European and non-European G20 countries would launch a "coalition of the willing" in support of the tax.

This goal was achieved. In his concluding press conference, summit host French President Nicolas Sarkozy announced that South Africa, Brazil, and Argentina were joining the list of current supporters, including France, Germany, Spain, the European Commission, and several other European governments. Sarkozy said he hopes to move towards implementation in early 2012.

Sarkozy and German Chancellor Angela Merkel have been the strongest supporters of taxing financial transactions for nearly two years. A few months ago, the European Commission also reversed its earlier opposition and released proposed legislation for such a tax in the European Union. But while Europe appears likely to move forward, the addition of several emerging market countries to the supporter list is significant for several reasons:

  • The increased revenue that can be generated.
  • The reduced potential for tax avoidance.
  • The enhanced chances that revenue won't just be plowed into European bank bailouts, but instead spent on human needs in both the global North and South.
  • The strengthened legitimacy through the backing of rising powers in the Global South.

For U.S. advocates, there was another modest victory. Over the past two years, Treasury Secretary Timothy Geithner has made no secret of his aversion to the tax. In September, Geithner angered some of his European counterparts by objecting to proposals to raise funds to address their deficit problems through an EU-wide tax on financial transactions.

In Cannes, the Obama position shifted from active blocking to friendly neutrality.

"The president made clear that he shares the objectives that Chancellor Merkel and President Sarkozy have in ensuring that the financial sector contributes an appropriate share to the resolution of crises," said Michael Froman, the White House's G20 point person. "I think there is broad consensus between the Europeans that the president met with this morning and ourselves about the ability of each to pursue this in their own way, whatever way they see to be most effective."

The final communiqué of the G20 leaders was a disappointment, however.

The only relevant line in it is a typical diplomatic non-statement: "We acknowledge the initiatives in some of our countries to tax the financial sector for various purposes including a financial transaction tax inter alia to support development."

But with the likelihood of a critical mass of countries coordinating taxes on financial speculation, this kind of mumbo jumbo may disappear in the coming years. Once other governments start generating massive revenues by taxing speculation, even the most closed-minded economic advisers in this country may see the issue anew.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.

Obama: If You Can't Lead Then Get Out of the Way

November 4, 2011 ·

In December 2008, in the eleventh hour of two weeks of intense negotiations over the future of a global climate deal, negotiators sat exhausted and exasperated as the team from the United States moved to block a temporary agreement. Visibly frustrated, the lead negotiator for Papua New Guinea growled at the US, “If you can't lead then get out of the way.” The room exploded in applause, and the US backed down.

President Obama has a choice to make regarding the Robin Hood Tax.Flash forward three years and the United States, now under what was supposed to be a progressive administration, is standing in the way of other countries’ progress again. This time a coalition of the willing in Europe – led by French president Nicolas Sarkozy and German chancellor Angela Merkel – are laying plans to put a tiny tax on financial speculation by big banks and financiers who treat the global economy like their own personal casino.

A financial speculation tax (a.k.a. FST, Robin Hood tax or financial transaction tax) could raise serious money – on the order of $400 billion per year, and groups that are worried about the impacts of climate change think that this is one of the best proposals out there for generating some of the money developing countries desperately need to adapt to a warming world and to build low-carbon economies.

The Obama administration – and in particular Treasury Secretary Timothy Geithner – has staunchly opposed taxing the Wall Street casino at home. But in a serious overreach of power, they’ve threatened to stop any mention of France and Germany’s proposal for the tiny tax in the G-20 Summit underway in Cannes, France.

In response, major US organizations including Oxfam America, Greenpeace USA, 350.org, and Church World Service States sent President Obama and key members of his administration a letter urging the US to, once again, step out of the way of internatinal progress. 

Here's the full text of the letter, and the list of endorsing organizations:

Dear Mr. President,

We write to urge you to signal support for European countries’ proposal for the G20 summit in November 2011 to endorse countries’ use of a financial transaction tax.  It is dismaying that, according to recent reports, your administration has repeatedly objected to European efforts to put such a tax in place, even for themselves.  We believe this obstructionism is deeply misguided.   A negligible levy on the financial sector has shown great potential to address growing inequities in the financial system, and to help prevent financial crises in the future. 

A small tax on the trading of stocks, currencies, derivatives and other financial assets has the power to raise hundreds of billions of dollars a year while discouraging dangerous financial gambling and rapid, high-volume speculative trading.  Funds raised by the tax should be used to strengthen broad-based economic prosperity and human security by creating green jobs, improving livelihoods and global health, and following through on critical climate change finance commitments to developing countries.

The idea of a small fee on the sale of financial transactions is not new. Such taxes have a long track record in many of the world’s leading economies. The United States, for example, had a transfer tax from 1914 to 1966, which levied a 0.20 percent tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help financial recovery and job creation during the Great Depression.

Today the idea is supported by many G20 leaders, including French President Sarkozy and German Chancellor Merkel, and innovative sources of finance remain high on President Sarkozy’s list of priorities for the G20 Summit. The European Commission recently published legislation for a European financial transactions tax. Bill Gates will formally present a report on development finance at the G20 in which he is expected to identify a financial transaction tax as one of the most credible and feasible sources of innovative finance. The IMF has also published papers noting the feasibility of such a tax.

But, Mr. President, while momentum builds in Europe your administration continues to block progress. We were deeply disappointed when reports from last month’s meeting of European Finance Ministers revealed that Secretary Geithner repeatedly discouraged European countries from moving forward with a financial transaction tax – even amongst a “coalition of the willing.”

Public anger is growing over Wall Street bailouts, record corporate executive excess and broken promises to build a clean economy. The “Occupy” movement is proof of that anger. You have an opportunity to stem this frustration by bringing a message of encouragement for a European financial transaction tax to the G20 Summit.

We, the undersigned organizations, call on your Administration to take a bold stand against Wall Street greed and negligence and stand for accountability and economic justice by supporting European leaders’ action on a financial transaction tax at the G20 in Cannes. 

Respectfully yours,

350.org

ActionAid USA

Affording Hope Project

Center for Biological Diversity

Center for Community, Democracy and Ecology

Center for Participatory Research and Development

Center of Concern

Chesapeake Climate Action Network

Church World Service

EcoEquity

FERN

Foreign Policy in Focus

Friends of the Earth U.S.

Grassroots Global Justice Alliance

Greenpeace USA

Holy Cross International Justice Office

International Forum on Globalization

International Rivers

International-Lawyers.org

Jubilee USA Network

KyotoUSA

Maryknoll Office for Global Concerns

Movement Generation: Justice & Ecology Project

Nord-Sud XXI

Oil Change International

Oxfam America

Pacific Environment

Pan Africa Climate Justice Alliance

Stiftung Nord-Süd-Brücken

Sustainable Energy & Economy Network, Institute for Policy Studies

Tax Justice Network USA

United Methodist Church, General Board of Church and Society

Urgewald

Women's Environment and Development Organization


cc: Secretary Timothy F. Geithner, Department of the Treasury; Michael Froman, Deputy Assistant to the President and Deputy National Security Advisor for International Economic Affairs

Gates Backs the Wall Street Tax at the G20 Summit

November 3, 2011 ·

The world's second-richest man and a group of American nurses on the frontlines of the Occupy Wall Street protests came to the G20 summit in Cannes, France this week to advocate for the same thing.

Nurses check up on Bill Nighy after his endorsement of the Robin Hood Tax. Photo by Sarah Anderson.Bill Gates came because French President Nicolas Sarkozy asked him to give G20 leaders recommendations on how to raise funds to meet the needs of the world's poorest. Among Gates's proposals: a small tax on trades of stocks, derivatives, and other financial instruments, also known as a financial transactions tax (FTT), Wall Street speculation tax, or the Robin Hood tax.

According to an advance copy of Gates's report, "FTTs already exist in many countries, where they generate significant revenue, so they are clearly technically feasible. According to the IMF, 15 G20 countries have some form of securities transaction tax. In the seven countries where the IMF estimates revenue, these taxes raise an estimated $15 billion per year."

"It is very plausible that certain kinds of FTTs could work," Gates told the Guardian. "I am lending some credibility to that. This money could be well spent and make a difference."

Gates has a net worth of $59 billion. So forget the 1 percent, he'd be in what, the top 0.001 percent? Meanwhile, representatives of the 99 percent were outside the summit security zone, plugging the same idea.

National Nurses United, the largest union representing U.S. nurses, came to France from the Occupy Wall Street protests across the United States where they have been providing first aid for the encampments. In Cannes, they dressed in their scrubs and joined nurses from Australia, France, Ireland, and Korea. This global group then administered an FTT saline drip to an ailing world economy — represented by a man painted in full body art as the Earth.

"The economic decline is literally making our patients sick," said one of the U.S. nurses. "We see more and more children with conditions related to poor nutrition and stress." The solution, according to the nurses, is a Wall Street tax that could generate the revenues needed to address human needs.

Bill Nighy, an actor famous for his roles in "Love, Actually" and other British films, jumped right into the world economy's hospital bed and posed for photos. "People around the world are dying of illnesses that should have been eliminated hundreds of years ago," Nighy said, noting that a new Wall Street tax could help raise the money required to stop those scourges.

One of his contributions to the campaign for such a tax in the UK was a video that went viral, in which he plays a banker trying to argue against the idea. Ultimately, his character can't find a good reason why not to raise huge amounts of money for the things people need through a tiny tax on financial transactions.

Back inside the summit venue, there's a frenzy of last-minute lobbying going on to try to line up a group of G20 governments to launch a “coalition of the willing on FTT.”  The Obama administration isn't expected to be on the list. 

But RoseAnn DeMoro, National Nurses United's executive director, said, “Nurses don’t give up on people and they won’t give up on this.” The union also spearheaded a rally in Washington, DC today, with more than a thousand nurses and their allies targeting opponents of the Wall Street tax in the Treasury Department and Congress.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.

A Few Thoughts on the Mid-Term Elections

November 2, 2010 ·

As we prepare to brace a Republican-controlled House after today’s elections, below are a few thoughts on how IPS is positioning itself in this new political landscape. We’d love to hear what else you all are thinking:

1. We are in for 2 years of stalemate at the national level.  This new balance of power in Washington will not allow all much of anything positive to pass, and it won't allow the government to put money into stimulating the economy and creating jobs.  So, the economy is likely to remain in stagnation, with high unemployment, and a lot of suffering. With more Republicans in power, the rhetoric of cutting government spending will gain more and more traction, especially in social safety net programs like social security, unemployment insurance and SNAP.

We need to fight for the jobs programs and the safety net programs, and we will be engaged in the battles to ensure the funding of existing safety net programs. 

2. In this context of fiscal austerity, there is a big space to talk about what the government should cut.  We have two big categories at IPS: the defense/war budgets, and the subsidies to big oil and big corporations. However, as we all know, cuts alone won’t be able to balance our budget. We propose to not only allow the Bush Tax Cuts for the wealthy to expire, but we also strongly encourage politicians to introduce and support new taxes like a progressive estate tax, a financial speculation tax and a currency transaction levy.

3. In this period of stalemate at the national government level, there are big spaces to advance things at the state and local level, where progressives run most big cities, and progressive governments will be in place in many states, like Maryland, California, New York, Maine, Hawaii, and Oregon.  We will be pushing for Domestic Workers Bills of Rights in all states, while also working on solutions that will take us closer to a New Economy, like creating state banks in places like Maryland, and encouraging Cleveland’s government to use its procurement powers to support worker-owned coops.  We'll be utilizing our inside-outside strategies here, working with both activists and State Senators and city council members.

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