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A proposal for predictable income: the currency transaction tax – the elephant in the room

A proposal for predictable income: the currency transaction tax – the elephant in the room. Action for Global Health conference February 2009. What is ‘Innovative’ Finance?. Principles: sufficiency; predictability; additionality; verifiability; ease of implementation

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A proposal for predictable income: the currency transaction tax – the elephant in the room

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  1. A proposal for predictable income: the currency transaction tax –the elephant in the room Action for Global Health conference February 2009

  2. What is ‘Innovative’ Finance? • Principles: sufficiency; predictability; additionality; verifiability; ease of implementation • Reliable, long-term, determined by need • Raised creatively, spent strategically: UNITAID • If ‘Innovative’ finance isn’t ‘additional’ then what is its value?

  3. Types of Financing Instruments Voluntary: lotteries, opt-in/opt-out schemes Borrowing: Specialised bonds  IFFIm Market mechanisms: auctioning of international carbon emission permits (Climate Change  Copenhagen) Taxation: • Aviation/Maritime levies  UNITAID • Levies on Financial Transactions: General/stocks/bonds/ currency

  4. Volume/Potential • Financial transaction taxes for years on instruments including bonds and stocks - applied in many countries: UK, USA, China, India, Colombia • Currency: $500 tr. 2004 - $1.9 tr. per day $800 tr. 2007 - $3.2 tr. per day < $1,000 tr. 2008 - $4 tr. per day

  5. Why it is feasible? • Computerised collection – electronic/automated • Rate: 0.005% - 0.01% • Revenue: UN University – $33 - $60 billion per annum • UNITAID – important precedent • Do you think it’s true that a country that wanted to implement a currency transaction tax on its own currency couldn’t do it?

  6. With financial crisis - good/bad timing? • Press: bail out banks; war-chest for IMF; augment EU budget • Historical obstacles from the banking world are less present now as governments are in control of many of their institutions • A CTT would mitigate against the most speculative of currency trades helping to make the market more stable • At the low rate proposed it would not constitute an undue burden on the banking system • Can the world afford especially in these financially difficult times to leave this vast revenue stream untapped?

  7. Responding to Health Sector needs • Predictability – even in adverse times the foreign exchange market is still growing • Providing a long-term structural difference: Health system strengthening; clean water; the major diseases • The elephant in the room

  8. Conclusions • No monopoly on this idea • Unique window re all things ‘banking’ • The Leading Group – Paris, Spring 2009 • Commitment of govts. & civil society to build on UNITAID success to multiply efforts to make the CTT happen in the coming year!

  9. THANK YOU

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