April 9, 2010
The European Commission is telling us that governments should raise taxes from the financial sector, not only to pay back the banks’ bailouts and combat climate change, but also to fight poverty in the developing world. I am disappointed that your article does not make any reference to this third crucial pillar of reducing global poverty, or the missed opportunity for the Commission to capitalise on the solution at its fingertips.
In its paper, the European Commission argues that we need a tax to both protect the financial system against future crises, and to raise money to combat global poverty and climate change. However, in the same paper the Commission goes on to favour a limited bank levy (the so-called ‘stability fee’) that would fail to raise any cash for poor people or the planet.
A Financial Transaction Tax (FTT) of around 0.05% would yield more than €400 billion globally every year at no cost to the ordinary taxpayer. It would also address the climate and the poverty crises, whereas the limited levy proposed by the Commission would merely take care of the financial sector.
EU finance ministers meeting next week in Madrid must support a concrete proposal that can also more fairly redistribute wealth. A simple tax to insure against future bank bail-outs is far from the bold leadership we need from the EU ahead of the G20 meeting in Toronto later this year.
Now more than ever, it is crucial to have cash to fight both the development and climate change crises. Five years to the 2015 deadline, the EU is not on track to meet its commitments towards the Millennium Development Goals, the strongest commitment from world leaders to fight poverty and hunger. An FTT could raise revenues – on top of official development assistance – to help governments meet their promises and to invest in a fairer and more secure world for all of us.
Economist Jeffrey Sachs, a strong supporter of the FTT, recently pointed out that “of all of the uses of government revenues today, the most urgent of all is surely to meet our commitments to the world’s poorest people. Reducing our budget deficit is crucial. Closing the deficit of political will on urgent development aid is a matter of life and death”.
Oxfam International’s EU office