A tax for our times!
This week, ministers from every country on earth are meeting in Addis Ababa in Ethiopia for the 'Third Conference on Financing for Development.' An incredibly important occasion at which governments must address the disparities of wealth and opportunity between their respective nations reflected in vast differences in areas such as clean water, access to medicines and basic education.
More money, spent better, is required to tackle these problems. With the Sustainable Development Goals (SDGs) due to be agreed in New York, in September, and a huge Climate Change summit in Paris, in December, this year - of all years - is massively important from the perspective of how we pay for development and climate change. There is a huge amount at stake.
It is in this context that innovative sources of finance, such as the Financial Transactions Tax (FTT) – or ‘Robin Hood Tax’ - can play an important role complementing the current volume of aid.
The FTT, in a nutshell, is a small tax on the transactions of financial firms such as banks, rather than those of ordinary individuals and could yield billions in extra revenue every year for the countries that implement them.
The FTT is a simple idea and already commonplace. In the last few decades, more than 40 countries have implemented these taxes, with more than $30 bn per year currently being raised worldwide. Germany, France, Italy, Spain and seven other European countries are moving forward with the introduction of an FTT with first revenues expected in 2016-17. (Revenue would go to finance ministries, not to Brussels, as opponents of the FTT often claim.)
This is money that should be used to protect and create jobs domestically and help states meet their international commitments to save lives in developing countries and combat the threats of climate change. France has already agreed that at least 20% of the FTT revenue it raises will be spent on financing for sustainable development – other countries in the group of eleven may well follow their lead.
The FTT is just and fair. In a world, where financial institutions are the clear winners of globalisation, is it not right that they should contribute to those who have lost out? Especially because of their culpability for the recent financial crisis that has brought such economic hardship to so many at home and abroad. And we all know that banks can afford it - since the start of the financial crisis, they have paid out £166 billion in fines for a multitude of crimes and misdemeanours without complaint.
With more than a million voices calling for the FTT in Europe, it is clearly very popular.
And with money from FTTs now on the horizon, it is surely just that a reasonable proportion of the billions in new revenue that will be raised, is spent saving lives and protecting the livelihoods of the poorest people on our planet.
That’s why today, in Addis Ababa, we’re helping to launch a declaration signed by countries around the world, asking for innovative financing such as FTTs to be used to meet the SDGs.
The FTT is predictable. It’s reliable. It’s efficient. And it’s an idea whose time has come.