Currency Transaction Tax
An old idea reactivated by the financial crisis
Well before the present economic and financial crisis, the possibility of a currency transaction tax (CTT) was of interest to certain countries and numerous NGOs.
Initially presented as one of the options set out in the Landau report, CTT involves a tiny levy on activities typical of globalisation and subject to very little taxation, with the aim of financing global public goods such as, for example, health or sustainable development.
The appropriateness of a global tax on foreign exchange transactions is raised regularly by several NGOs (for example: Ubuntu, Stamp Out Poverty and Tax Justice Network). It is a subject of discussion in the Leading Group on Solidarity Levies to Fund Development on the grounds of the stable and predictable flows that would be generated by such a tax on global-ised activities, and it should therefore be placed in the category of innovative financing mechanisms.
Some countries (France and Belgium) have committed themselves in this regard, making ap-plication of the tax conditional on its adoption by all European countries.
The Leading Group
Within the Leading Group, a tax on foreign exchange transactions was discussed as early as 2006, notably by non-governmental organisations. In Conakry, the Leading Group called upon “all the states to seriously consider the implementation of these instruments and to to-tally or partially allocate their proceeds for development” especially “considering the potential of those instruments in term of mobilised resources.”
A great deal of work has already been done on this, especially under the Norwegian chair-manship, during which a study of the issue was commissioned from the NGO Stamp Out Poverty en 2007.
Certain member countries in the Group such as France or Belgium already have a legislative framework in place: France has adopted the law of 29 December 2001 instituting such a tax but making enforcement conditional upon its implementation throughout the European Un-ion ; Belgium went down the same road in 2004.
Several countries are interested in such a tax, notably Norway, Spain, Chile, Brazil and Japan, and have already started to move in this direction. Other countries regularly refer to the concept and there were a number of debates on this at the Doha International Conference on Financing for Development last December. At the present time there exists no such levy on currency transactions, unlike other financial transactions.