Tuesday, November 10, 2009
Some European leaders are voicing support for a new tax on banks that get involved in the high-stakes trading of derivatives as a way for governments to cover such bets in the event of future bailouts. But the United States and Russia are reacting coolly to the idea, which has been branded as either too complex to implement or too restrictive on trading.
During the recent G-20 meeting in St. Andrews, Scotland, British Prime Minister Gordon Brown paid a surprise visit and promoted the new tax as an “economic and social contract” to alleviate the burden of bank rescues from taxpayers. France’s finance minister, Christine Lagarde, also expressed support for a “Tobin tax” on derivatives, equities and currency trades.
Named after Nobel Prize-winning economist James Tobin, the Tobin tax was written off in the 1970s as impossible to impose because technology then could not properly account for derivatives trading. But advances in computers and software now make such a levy possible, supporters argue, They propose that the tax amount to .005% to 1% per trade.
At the G-20 meeting, U.S. Treasury Secretary Timothy Geithner said the U.S. would prefer to gradually impose a fee on banks that have received public funds instead of imposing a Tobin tax. Russia’s finance minister, Alexei Kudrin, also said he was skeptical of such a tax.
-Noel Brinkerhoff
Gordon Brown and US in G20 Clash over Tobin Tax on Banks (by Katherine Griffiths, Times of London)
Shifting the Burden from Main Street to Wall Street: Why We Need a "Tobin Tax" (by Ellen Hodgson Brown, Truthout)
Britain and U.S. Clash at G-20 on Tax to Insure Against Crises (by Jukia Werdigier, New York Times)
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