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The Financial Transaction Tax: Feasibility, Desirability, Political Will. David Hillman Director. Leading Group 12 th Plenary Conference, Abuja 17 th January 2014. What is the FTT?. Taxing financial transactions such as: stocks, bonds, foreign exchange ,
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The Financial Transaction Tax: Feasibility, Desirability, Political Will David Hillman Director Leading Group 12th Plenary Conference, Abuja 17th January 2014
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 provenance 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
Stability – an anti-churning tax Revenue Leading Group – Innovative Financing for Development – Solidarity Levies Aviation taxes UNITAID – pilot project Desirability
Policy developed over years – financial crisis –> policy space opened History: 2011 - France Germany EU 27-country legislation Enhanced Cooperation Procedure: side-stepping of blockers Current situation: negotiating text May 6th Allocation: given where initiative started ie here – importance of as a high a proportion as possible going to development 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