Global Policy Forum

By Alex C. Michalos

On June 28, 2000 an extraordinary event occurred at the European Parliament building in Brussels.

About 100 people attended the First Inter-Parliamentary Meeting on Tobin-type taxes. Tobin-type taxes on foreign currency speculation were first proposed by the Nobel Prize winning economist James Tobin in 1972, following some earlier suggestions by John Maynard Keynes in 1936. As a result of major currency crises about every 19 months throughout the 1990s, some people began to reconsider and reformulate some of Tobin's ideas.

The people assembled in Brussels came to listen to and engage in discussions with 22 Members of the European Parliament (M.E.P.s) from parties in 12 of the 15 member countries of the European Union, 14 M.P.s from parties in 8 countries and 8 people from non-governmental organizations (NGOs). It is, to say the least, impressive to address an audience for which every sentence one utters is being simultaneously translated into eleven languages.

The Canadian connection to this movement began around the G-7 meeting held in Halifax in 1995. A small group calling themselves the Halifax Initiative appealed to our Finance Minister Paul Martin to ask the seven countries to undertake an investigation of Tobin-type taxes. The issue was raised and rapidly dismissed as impractical.  Mr Martin reminded Robin Round, a driving force in the Halifax group, that there was after all no national constituency behind the idea. So, Robin's group and activists in NGOs like the Ecumenical Coalition for Economic Justice, Results Canada, the Council of Canadians, some labour unions and others (the usual suspects) proceeded to build a national constituency. After strenuous lobbying, on March 23, 1999 in a vote of 164 to 83, the Canadian House of Commons passed a resolution brought forward by NDP Member Lorne Nystrom calling for Canada to join with other countries in high-level investigations of the feasibility of Tobin-type taxes. The resolution was supported by the Liberals and NDP, and opposed by the Reform Party, Progressive Conservatives and the Bloc Quebecois. One Bloc Member, Stephan Tremblay, who supported the resolution, was the lone Canadian MP speaking at the Brussels meeting.

Nystrom's motion was the first of its type passed by any parliamentary body in the world. Activists in other countries have been as vigilant as Canadians, with varying levels of success.

In France, for example, in 1998 a group called the Association pour une Taxation des Transactions financieres pour l'Aide aux Citoyens (Association for the Taxation of financial Transactions for the Aid of Citizens -  ATTAC) was formed in Paris, which today has over 100,000 members in over 100 French cities as well as chapters in Argentina, Austria, Belgium, Brazil, Greece, Ireland, Italy, Morocco, Netherlands, Quebec, Senegal, Spain, Switzerland and Tunisia. As a result of members of ATTAC chapters making common cause with like-minded groups in other countries (e.g., War on Want in the UK, SOLIDAR and Caritas Internationalis in Europe and elsewhere, the Tobin Tax Initiative in the USA), resolutions patterned after Nystrom's were brought forward in Finland, Brazil, Belgium, France, the USA and the European Union.

In January 2000 a Nystrom-type resolution had the support of 200 M.E.P.s but fell short of passage by only 6 votes. Following that close call, supporters of the resolution decided to bring together proponents from around the world in order to further develop and strengthen their position for a revised resolution to be considered this fall.

A Founding Charter was crafted for the Intergroup (of M.E.P.s) on Capital Tax, Fiscal Systems and Globalization, co-chaired by Harlem Desir from France and Glyn Ford from the UK. Among other things, the Intergroup is calling for a series of hearings in the European Parliament on Tobin-type taxes, seminars with M.P.s and NGOs of nations in the North and South,  and international initiatives in the G-7, G-20, IMF and United Nations. Four hundred parliamentarians from around the world have signed a supporting petition, and the aim is to obtain at least 1000.

It is perhaps surprising that such extensive and sustained efforts must be made in order to get so-called democratic governments to respond to citizen requests merely for serious investigations of an idea.

No doubt part of the problem is simply the result of governments having crowded agendas. But it is also the case that we live in a world in which relatively few wealthy people and their corporate financial agents have influence on governmental agendas that is disproportionate to their numbers, and Tobin-type taxes pose a threat to their hegemony.

Such taxes clearly represent a vehicle by which other members of civil society can re-assert their right to control their financial and, therefore, their political future. More precisely, in the form of a two-tier tax levied at the point at which wholesale foreign exchange transactions are settled and payments made, such taxes promise two important benefits.  First, a basic low rate tax of, say, .02% (2 basis points) on all payments would  provide a steady flow of revenue from the global market to fund  issues of concern to the global community like the elimination of poverty, homelessness, disease and environmental degradation, and the provision of education, food, shelter and hope. Second, a high surcharge tax rate perhaps as high as 100% on payments (effectively a windfall profits tax on capital) outside a predetermined band of normal exchange would allow governments to combat currency speculators by taxing them instead of by raising interest rates causing recessions and unemployment, or by exhausting foreign currency reserves. In the light of such promises, it is understandable that Tobin-type taxes have attracted and will continue to attract so much attention by so many people at this particular point in history.

Nobody is claiming that such taxes will solve all the problems currently troubling financial markets, but we do believe they will form part of a reasonable reformation of the world's financial architecture.

Alex C. Michalos, Ph.D. F.R.S.C. Professor and Chair of Political Science University of Northern British Columbia

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