The Financial Transaction Tax:The Financial Transaction Tax:Feasibility, Desirability, Political Will Feasibility, Desirability, Political Will

David Hillman David Hillman DirectorDirector

What is the FTT?

Taxing financial transactions such as: stocks, bonds, foreign exchange,derivatives ie futures, forwards, swaps, options

European FTT legislation - rates: 0.01 – 0.1%

Revenue: 34 billion euro per annum

Spending: 50% domestic; 50% international:Development/health (25%) + climate change (25%)

Heritage and provenanceHeritage and provenance

More than 40 countries: More than 40 countries: Argentina, Australia, Austria, Belgium, Brazil, Chile, China, Colombia, Denmark, Ecuador, Finland, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Malaysia, Morocco, Netherlands, Pakistan, Peru, Philippines, Portugal, Russia, Singapore, South Korea, Switzerland, Taiwan, UK, US

FTTs only ever implemented unilaterally:re-location of trading dealt with by ‘good design’

Feasibility

StabilityStability – an anti-churning tax – an anti-churning tax

RevenueRevenue

Leading Group Leading Group – Innovative Financing for – Innovative Financing for Development – Solidarity LeviesDevelopment – Solidarity Levies

Aviation taxes Aviation taxes UNITAID – pilot project UNITAID – pilot project

Desirability

Policy developed over years – financial crisis –> Policy developed over years – financial crisis –> policy space openedpolicy space opened

History: 2011 - France History: 2011 - France Germany Germany

EU 27-country legislation EU 27-country legislation Enhanced Cooperation Enhanced Cooperation Procedure: Procedure: side-stepping of blockersside-stepping of blockers

Current situation: Current situation: negotiating text negotiating text May 6 May 6thth

Allocation: Allocation: given where initiative started ie here – given where initiative started ie here – importance of as a high a proportion as possible going to importance of as a high a proportion as possible going to developmentdevelopment

Political Will

Prospects in Africa

The opening of policy space – the FTT is no longer off limits

African countries with largest financial sectors can generate the most revenue

Revenue can be spent domestically on Public Goods such as health and education

It is time the financial sector carried more of the burden