When A Fake European Union Discusses a Fake Tobin Tax
Officially, the governments are looking at the CTT as an innovative means for obtaining development finance. Precisely how the tax revenue would be used for the benefit of the development of developing countries, we do not yet know. Perhaps, it could be used to finance the Millennium Development Goals of the UN.
According to Bernard Kouchner, the French minister of foreign affairs, the rate of tax could be set at 0,005 %, in which case the expected revenue would amount to 20-30 billion dollars per year. Kouchner's proposal is actually more than a CTT, in the sense that the international trade in assets and derivatives would also be taxed. It would, in other words, be a Financial Transactions Tax (FTT).
A number of European government ministers and heads of states, including Sarkozy, Merkel and Barroso, have stated willingness to support on FTT of the kind Kouchner has proposed.
For their part, leaders of the Association to Tax financial Transactions to Aid Citizens (ATTAC) have pointed out (although perhaps not with the desired clarity) that Tobin's original tax-rate was 0,5-1 %, and thus 100-200 times higher than Kouchner's. While Tobin actually wanted the CTT to intervene in the speculative movements of capital, Kouchner &Co definitely wish to let these movements continue unhampered. Ironically, James Tobin paid very little attention to the tax revenue, because he was after stability, not 'development finance'. On the other hand, the money trade has grown with two orders of magnitude since Tobin's time, as has, of course, the potential revenue from a global "Tobin Tax". In the present situation, therefore, the proposal to use a FTT to "aid the citizen" of the South, might well be feasible.
The French ATTAC leaders Aurelie Trouvé and Jean-Marie Harribey stated last Friday, that the EU governments are deliberately putting forward a proposal that they know will not be accepted by the US government. (Note also that Mr Reinfeld, the leader of the Swedish EU presidency, and Mr Juncker of Luxemburg, have given the thumbs down to the FTT proposal.) For ATTAC a FTT could anyway only be a first step towards genuine regulation of the financial markets, to be completed by measures to close down tax havens and forbid the speculative trade with complex derivatives and contaminated assets.
But nobody, even within the ATTAC movement, now seems to remember the precise and politically mature model Treaty on Global Currency Transactions Tax that Finnish political scientist Heikki Patomäki and Belgian lawyer Denys Lieven presented at the World Social Forum in Porto Alegre 2002. Under this proposal the governments who want a CTT or FTT would form a new CTT Organisation, if necessary independent of the USA. It would be possible to do so already if these countries accounted for 20 % of the global financial markets. The CTTO would have democratic decision-making bodies for the decisions about the tax-rate and the use of the revenue. The European Union alone would not be capable of setting this up; but several countries of the Global South would probably be willing to join. (The Draft Treaty on Global CTT is available online ,in a number of languagues, at http://www.nigd.org/ctt.)
The issue of the CTT and/or FTT obviously leads back to the question of the European Union. What we have today is a fake union, divided on most strategic issues and therefore also incapable of making a worthy contribution to rectifying the world's financial system. A genuinely independent EU would certainly be able to help, and the USA would have to follow, because the USA has exhausted its capacity to provide world leadership. It is still a military giant, but a giant with feet of clay. Hopefully the day is drawing closer when the peoples of Europe decide to put away the 'nuclear umbrella' and start the process of nuclear abolition on their own. When that day comes Europeans will at long last acquire the ability to form a real Union and, therefore, also to contribute to the building of a new financial architecture.
