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Solidarity levies – UNITAID and beyond

Solidarity levies – UNITAID and beyond. David Hillman Coordinator. Marketplace on Innovative Financial Solutions for Development Paris, March 2010. MDGs 2000 -> 2005 – $100b. extra pa Leading Group launch, Paris, 2006 Solidarity levies: aviation  UNITAID

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Solidarity levies – UNITAID and beyond

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  1. Solidarity levies – UNITAID and beyond David Hillman Coordinator Marketplace on Innovative Financial Solutions for Development Paris, March 2010

  2. MDGs 2000 -> 2005 – $100b. extra pa Leading Group launch, Paris, 2006 Solidarity levies: aviation  UNITAID Borrowing: specialised bonds  IFFIm Voluntary Massive Good Levies on Financial Transactions: General/stocks/bonds/currency Meeting the Millennium Promise

  3. Financial Transaction Taxes (FTTs) • FTTs – commonplace: Stocks, Corporate Bonds, Government Bonds, Futures ie: Argentina (since 2000 at 0.6%); US: SEC Stocks: Austria, Belgium, India, UK - $5b.pa • Exponential growth: Bonds: 1993 - $20 trillion ; 2005 - $60 tr. Stocks: 1993 – $7 tr.; 2005 - $51 tr.

  4. Currency – foreign exchange: 1973: $4 trillion pa; mid-80s: $40 tr. pa 2004: $500 tr. pa = $1.9 tr. per day 2007: $800 tr. pa = $3.2 tr. per day Rate: 0.005% - Intelligence Capital Revenue: min.$33b. pa Criteria: long-term, sufficient, predictable Currency Transaction Levy

  5. Automated payment at point of settlement *Real Time Gross Settlement *Continuous Linked Settlement Bank *SWIFT messaging UNITAID – important precedent: solidarity levies, nationally collected, internationally disbursed Legislation: France (2001); Belgium (2004) Why it is Feasible?

  6. Relationship of deference v. Governments and Banks changed - the market could not save itself – re-evaluation Anger at banking sector for causing crash while earning disproportionate rewards, excessive profits and bonuses: desire to recoup, rebalance, re-write social contract In developing world – secondary effects: foreign direct investment, remittances, capital flight, commodities harder to sell, aid reduced Recoup, rebalance, re-evaluate

  7. Political picture • G20 Pittsburgh – Merkel/Sarkozy - IMF tasked to explore banks paying for bailout • LG taskforce on ‘FTTs for Development’ launched in October in Paris • Nov: Gordon Brown advocates FTTs • Nov: UK Chancellor announces a tax on bankers bonuses

  8. Political picture (contd) • Jan: Obama announces tax on bank profits • Obama announces re-regulation of banking activity • February: Robin Hood Tax campaign launches in the UK

  9. Time is now: CTL – stepping stone towards broader progress on FTTs Look forward to report of LG Taskforce – NGOs keen for rec. of early CTL implementation as successor to UNITAID Can we afford not to harness this hitherto untapped revenue stream? Who do you support? Conclusion

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