EED writes to IMF in support of a global Financial Transaction Tax
(Bonn, 26.01.2010) Until the Feb. 1st, 2010 the IMF is collecting on-line opinions form Civil Society on how banks can contribute in a fair and substantial way to offset the cost of states for their bailing- out the private banks during the financial crisis 2008/2009. See EED's email to the IMF appended. If your Civil society organisation would like to send its point of view to the IMF please do so before Feb. 1st.
A number of G20 heads of states are basically for the introduction of a Financial Transaction Tax, but the G20 as a whole at their summit in Pittsburgh deferred the issue and asked the IMF for a report. In the meantime in many countries a campaign for the introduction of a Financial Transaction Tax (FTT) has been started and has obtained remarkable momentum.
In Germany the campaign "Tax against Poverty" has won the support of almost all political parties except for the Liberals. Chancleress Merkel wants the Tax, but she wants it only to stabilise the global financial system- by no means a meek task. But the campaign, of which EED is a part, wants more.
We want the financing of the fight against property as well as climate change financing been aided through this tax. With 0.025% of all speculative transactions that should be feasible.
Vote to IMF on FTT....
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Dear coordinators of the IMF Consultation on Financial Sector Tax,
thank you for the opportunity to participate in this opinion collection for the report on fair and substantial participation of private banks in the bailing- out cost of the financial crisis. Please refer this position to the experts drafting the report.
EED requests you to underline in the mentioned IMF report for the next G20 summit the need to introduce a Financial Transaction Tax in to the global financial systems.
EED is part of the German campaign “TAX AGAINST POVERTY” (www.steuer-gegen-armut.org).
As one of the two Development Organisations of the Protestant Churches in Germany, EED is part of a world wide network of civil society organisations for development and the fight against poverty. EED shares the conviction with the International Financial Institutions that financial stability is a predominant requirement to ensure good conditions for economic development.
The financial crisis has demonstrated how vulnerable this stability is and how fast particularly, the poor can fall victims to instability. An example of 2008/9 is the role of food price speculation in food price hikes and food scarcity and increasing hunger in the developing world. EED is concerned that despite the heavy toll of the financial crisis in 2008/2009 effective measures to reduce speculation have not been taken.
The financial crisis has curtailed the opportunities for income and employment and therefore, impoverished millions of poor people. Yet, if one goes by publicly available figures and reports of global players in the banking business, profits from speculation have increased substantially in 2009. Based on the finances made available to private banks and private financial institutions as part of bailing-out support and stimuli programmes from Governments' and Central Bank’s, the private financial institutions reinvigorated their speculation commodities, raw materials, energy, metals and other resources, real estate, agricultural lands, etc.
to achieve maximum profits.
They did so while they were actually expected to make the billions available to stimulate economic growth and in particular, for production and trade loans for which there was a shortage of credit. Clearly, the private financial institutions did not see financial stability as their area of concern, despite different statements of financial industry representatives. Now regulation and taxation for their business must be imposed by Government. There is a need to tax the profits of speculation in order to tone down the amount and level of speculative deals in the global markets. Food and commodities must never again go out of reach of the poor, not in high nor in low income countries. A Financial Transaction Tax is a suitable measure to achieve this objective.
EED is aware the FTT will not solve all the problems connected to the creation of a more stable financial system. Other regulatory steps will be required as well. But suitable taxation could prevent the overheating of e.g. the food or derivative markets and thus tone down increases of the price of food or the development of bubbles in various markets.
If one extrapolates from a Bloomsberg report dated Nov. 30 2009 (
http://www.bloomberg.com/apps/news?pid=20601109&sid=aZxk6z7R4V5I&pos=10) the finances raised through a Financial Transaction Tax could be substantial: With stock and currency markets mobilizing about 900 trillion US Dollar in turnover each year and derivatives another 625 trillion, a tax of 0.01 percent might raise $ 152 billion annually, sufficient to stabilise the global financial system. To raise the transaction tax to 0.025 could provide climate mitigation and adaptation funding for developing countries and approach the development of even the poorest countries in a systematic fashion.
Kindly represent this position in the report due to the next G20 summit
With kind regards
Peter Lanzet
Arbeitsstelle Entwicklungsfinanzierung
(Senior Policy Advisor Development Finance)
Entwicklungspolitischer Dialog (Policy Dialogue Desk)
Evangelischer Entwicklungsdienst e.V. (EED)
(Church Development Service, an Assoc. of the Protestant Churches in Germany)
Ulrich-von-Hassell-Str. 76
D- 53123 Bonn