Global Financial Transactions Taxation

The FTT should combine a currency transactions tax with a tax on all transactions in securities.

The purpose of the general taxation of financial transactions should be threefold:

• To provide instruments for the stabilization and the regulation of the global financial flows;
• To generate funds for the financing of social and economic development and public service;
• To make the financial system transparent, and, thereby, to further global democratization.

Today's highly centralized and digitalized systems for financial transactions and clearing, such as SWIFT, Clearstream and Euroclear, must be placed under democratic control. This is conditio sine qua non of greater financial transparency.

A Financial Transactions Tax Organization (FTTO), corresponding in many ways to the Currency Transactions Tax Organisation (CTTO), which is described in the Draft Treaty on CTT (2001) [1] by Lieven Denys and Heikki Patomäki, will probably be needed to implement the necessary FTT.

According to the the most recent report from the Bank of International Settlements, "a huge shadow system" is at work within the present financial system. [2] Ernest Backes and Denis Robert have exposed a central part of this shadow system in their books about Clearstream.[3] At he center of their investigation stands the networked, digital computer and the insight that, henceforward, banking and finance are, essentially, a computer programming project.

The management of the information about the financial flows, must, in the end become a task for public archivists and/or librarians [4]. The software which is developed for the financial management must also be free and open.

The same subject continued

30 October 2008

I do not think that we should try to sell the idea of a global tax on financial transactions (FTT) with the "insurance fund" argument. All sound economical systems should provide mechanisms for saving some money or resources for the bad days, but certainly not "to protect citizens from the astronomical costs of bailing out further banks and financial institutions".

In general,  I consider the main argument for a global FTT to be that it can help open the black boxes of the world's computerized financial system; thus I recommend an information-oriented approach to the FTT. The revenue generated by such global taxation may also be significant, and the FTT might also be used to stabilize the financial system , but the really important function of a global FTT should be to further global democratization by increasing the public's knowledge about what is going on in the world of finance.
The Schumacher lecture of Susan George, which I already quoted, contains a vision of how another, alternative financial system should be constructed. One of the necessary points on the agenda is the abolition of the tax havens, about which John Christensen and Richard Murphy from the Tax Justice Network have published a fresh article, Tax havens and the financial crisis.

But neither Susan George nor Christensen & Murphy mention Clearstream. While looking for news about Clearstream I found, to my dismay, that Denis Robert, the French investigating journalist has recently been sentenced in court for libel against the bank of all banks in Luxembourg. So Clearstream has scored a victory in its tenacious efforts to silence him! Hope to be back on this subject when I have more details about the continuing harassment of Denis Robert.

Choike has collected signatures on a statement "on the proposed "Global Summit" to reform the international financial system". (http://www.choike.org/bw2/). This relates to the planned G20 meeting on the financial crisis, which president Bush will be hosting on the 15th of November. The main demands of the statement are that a global summit on the financial crisis

1. " is inclusive and participatory of all governments of the world;
2. includes representatives from civil society, citizen?s groups, social movements and other stakeholders;
3. has a clear timeline and process for regional consultations, particularly with those most affected by the crisis;
4. is comprehensive in scope, tackling the full array of issues and institutions;
5. is transparent, with proposals and draft outcome documents made publicly available and discussed well in advance of the meeting."

I signed this statement as an individual, because these are elementary democratic demands. Yet I am convinced that the governments will not be capable of doing any good and right things without a strong pressure from non-governmental, civic movements. Susan George, in her Schumacher lecture, has sketched the programme we should be agreed on and forcefully put forward now:

• "... a new Keynesianism, not military this time, but environmental; a push for massive investment in energy conversion, eco-friendly industry, new materials, efficient public transport; the green construction industry and so on";
• "... take taxes up to the European level and to the international one through currency and other financial transaction taxes";
• "... debt cancellation for poor countries";
• "Tax havens that allow affluent individuals and corporations to avoid paying their fair share of the conversion should be shut down: it would be cheaper to pay the inhabitants of the Cayman Islands, Liechtenstein and the rest a living wage for twenty years. Plenty of cash would remain for eco-investments, job-creation and poverty relief."

In its essence, this is the program of ATTAC. But it has two weak spots. We must also, and in particular, raise the demand for European Nuclear Disarmament and make it a condition of the European Union, to be inscribed in its constitution.  This is a goal to achieve for Europeans, in the first place. Every important political question is connected to it: the future of NATO, the question of how to organize a global governance, the orientation of the real economy, which is a permament war economy, and of which the nukes and the related weapons systems (missile defense, and "star wars", in particular) are the top of an enormous economical -- or rather, uneconomical -- iceberg. Without this demand the movement will continue to lack a real political perspective. It will continue to grope in the dark. The weapons of mass destruction are also the weakest point of our adversary, it is his means to keep us scared and under his control; but when we attack him united on this point, we will we be real and courageous again, and we will win.

Secondly, we must make an offensive towards the heart of the present financial system, which is a computerized system, where the money is becoming equal to digital information. The "shadow banking system" , which now breaks down, has its centre in Luxembourg, in the financial machinery of Clearstream, the "notaries of the world". It is a myth that the financial system is non-transparent; yes, it is opaque to us, the people, but every deal of the financial capitalists in their tax havens is certainly being documented, all the data are there, and for the ones who have all the data, it is not non-transparent at all. As long as Clearstream, Euroclear and SWIFT are not under democratic control, the financial system cannot be controlled by the people. The situation now is, that the average journalists or ministers or economists, for that matter, have scarcely heard about these nodal points in the financial machinery, the digitalized clearing-houses, which have come into being only during the last few decades, and without which the financial globalization would not have been possible.

The role of information in the financial system has always been of prime importance, but the networked computer has changed the basic conditions - far from being opaque, the system is now transparent and controllable, at least in principle, thanks to the digital networks.

PS.  In addition to Susan George´s impressive Schumacher lecture (see above), I also re-read her "Budapest Paper" from October 2001, where she constated that we had all entered 'an age of radical insecurity and post-State conflict.'

In order to end this age of insecurity, we need to recognize the library-cum-internet as a global state power on pair with the national state powers. Instead of being hidden in the secret databases of Luxembourg's shady notaries, the financial data of the world must be recorded in public libraries and archives.

Mikael Böök
member of the ctt-team

References

[1]See the Draft Treaty on Global Currency Transactions Tax, written by Heikki Patomäki and Lieven A. Denys. This consultative document was first introduced at the World Social Forum in Porto Alegre in January 2002. The text of the draft treaty in English and in various translations to other languagues are found at www.nigd.org/ctt

[2] "Moreover, as evidence has accumulated that the financial system as a whole is no longer functioning effectively, those charged with prudential oversight must also ask themselves what went wrong. How, for example, could a huge shadow banking system emerge without provoking clear statements of official concern?", see Bank for International Settlements. 78th Annual Report, 1 April 2007– 31 March 2008, p 146.

[3] See Robert, Denis & Backes, Ernst: Révelation$ . Les Arènes, Paris 2001; and Robert, Denis: La boîte noire . Les arènes. Paris 2002.

[4] According to the present writer, the internet is becoming the new public library of mankind. The road forward towards democratic self-government goes via the "open space" of the social forum(s). I have presented some thoughts on this subject in a writing about The Documentation of the Social Forum(s).