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G20 rejects suggestion of a Tobin tax

The Financial Post reports that Canada, the United States, and the International Monetary Fund have rejected “a global tax on financial transactions — a so-called ‘Tobin tax’ — which was one of several options floated by (British Prime Minister Gordon Brown at the G20 finance ministers summit in Scotland this past weekend).”

Instead, “The International Monetary Fund is exploring the idea of making banks pay insurance fees to fund any future rescues in the sector, IMF managing director Dominique Strauss-Kahn said on Sunday.”

“The IMF will present concrete proposals for the tax next April to finance ministers of the Group of 20 leading economies, for review before submission to G20 leaders in June (at their summit in Huntsville, Ontario).”

The BBC reports that Max Lawson, Oxfam’s senior policy adviser in the UK, said: “A tax on banks would be a major step towards clearing up the mess caused by their greed. The G20 has a responsibility to act. Every minute around the world 100 people are forced into extreme poverty as a result of the economic crisis. Money raised by a financial transaction tax on banks could make a massive difference to the lives of ordinary people.”

More than ten years ago – in an open letter to Members of Parliament – the Council of Canadians supported the call for a Tobin tax.

In short, a Tobin tax is a suggested tax on all trade of currency across borders. Anti-globalization activists had championed it as a way to put a penalty on short-term speculation in currencies.

In 1999, the House of Commons passed a resolution directing the government to “enact a tax on financial transactions in concert with the international community,” but the government took little action on the matter.

The open letter from 1999 is at http://halifaxinitiative.info/content/open-letter-mps-re-vote-campaign-reports-march-15-1999.

The BBC report is at http://news.bbc.co.uk/2/hi/uk_news/8348653.stm.

Today’s Financial Post article is at http://www.financialpost.com/story.html?id=2199479.