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From: email@example.com (janice)
Date: 23 Aug 1998 21:22:39 -0400
The Tobin Tax Initiative: Multilateral Cooperation to Tax Currency Speculators By Soren Ambrose List of Principles for the Tobin Tax Initiative: 1. The financial crisis in Asia and elsewhere is adding to human suffering which must be alleviated. When currency is devalued, the purchasing power of citizens plummets, food and basic items become too expensive, the environment is less protected, and jobs are lost. This crisis exacerbates existing problems, such as the widening gap between rich and poor, the strain on the global environment, and high unemployment. 2. One of the causes of the financial crisis is the large volume of currency speculation that now occurs on a global basis. The foreign currency exchange has grown recently to over a trillion dollars daily, much larger than all the stock exchanges of the world. This market is so large and volatile that government central banks can no longer adequately protect the currency of their own nations. 3. The existing institutions that regulate monetary systems have inadequate and sometimes even destructive policies to deal with the crisis. For example, the austerity programs of the International Monetary Fund increase the level of suffering for those with the least "safety nets," while doing little to prevent destructive volatility. Reform of these institutions is an essential part of any effective solution to the crisis. 4. Reforms should include mechanisms to reduce the volume of destabilizing capital flows, through a transaction tax on currency speculation. Commonly but not necessarily called the "Tobin Tax," after the Nobel economist James Tobin who originated the concept, this tax would deter short-term or overnight trades, and thus shrink the volume of daily currency trading from its present trillion dollar daily level to a much smaller exchange, as it was until the late 1970s. Such a shrinkage would restore each nation's ability to control its own currency, would generate revenue for worthy programs, and would reduce the harmful consequences to the poor from currency instability. 5. To effectively reduce market volume, the tax percentage must be large enough to reduce incentives for overnight speculation. At the same time, it must be small enough to leave longer-term currency trades intact. Proposals range from .1% to .5% per transaction. The overall remaining volume would be enough to create sizable revenue. 6. Adoption by the major currency nations of the Tobin Tax mechanism would accomplish the volume-shrinking goal, so the adoption need not be universal to be effective. After alleviating the initial crisis, universal adoption should be the goal. 7. Collection and enforcement of the Tobin Tax are considered to be economically and institutionally feasible, and concerns regarding tax avoidance could be dealt with through adoption of regulatory mechanisms. 8. The annual revenue could be quite large, over one hundred billion dollars by some estimates. Therefore, baseline criteria for allocation to meet basic needs first should be established. Basic human and environmental needs must be met first, utilizing existing international agreements such as those addressing environmentally sustainable development, climate change, and hunger. 9. The revenue should go partly to the nations involved in each particular transaction, and partly into an international fund for less developed nations. The international portion of the revenue should be set aside in a series of earmarked trust funds for basic needs. These trust funds should be cooperatively administered in an open and democratic fashion. Agencies should cooperate with local civil society to provide actual services for basic needs, such as disaster aid and food distribution, small-scale agriculture and reforestation, health clinics and disease prevention, local water systems and pollution control mechanisms. Such administration should occur within the framework of producing local jobs, while ensuring adequate environmental safeguards, and protection of the rights of workers and other citizens. 10. Political will is the key to successful adoption, and grassroots support is essential to educate decisionmakers regarding this opportunity. We encourage decisionmakers to seek adoption and implementation of a tax on foreign currency speculation, and we encourage policy proposals that reflect this List of Principles. Mission Statement of the Regional Advisory Committee for the San Francisco - Bay Region: To raise the level of awareness of the Tobin Tax Initiative among grassroots opinion leaders, towards adoption and implementation of a tax on currency speculation in the international arena. Special attention should be given to implementation criteria; to involvement of the international as well as domestic progressive communities in policy development; and to building a grassroots support base for this effort, utilizing existing networks wherever possible. The list of supporters provided with this document is called the "San Francisco - Bay Area Regional Advisory Committee Members or Supporting Participants as of July 31, 1998" It includes academics, lawyers (including someone from the National Lawyers Guild), several 50 Years members (Anuradha Mittal, Kevin Danaher, Juliette Beck, Bill Ferguson, Rich Plevin, Christopher Myott, Ron Stief of CEEP, Kelly Quirke of RAN, Patrick McCulley of IRN, and folks from EDF and Sierra Club), Josh Karliner of "Corporate Watch," and Laura Soriano Morales of SAIIC. -- For MAI-not (un)subscription information, posting guidelines and links to other MAI sites please see http://mai.flora.org/