Congress Blog

David Joyce argues it's finally "Time for Tobin " - a Financial Transaction Tax

Two major upcoming major international meetings will take place against a background of growing global unemployment and inequality and major set-backs on economic development in countries across the globe. High level Government delegates will gather for The UN Summit, to review progress on the Millennium Development Goals (MDGs) in New York from 20 - 22 September, and the annual meetings of the IMF and World Bank, taking place in Washington on 9-11 October.

The global economic crisis continues to hit hard, with 200 million more people falling into absolute poverty since 2008, millions of young people with little or no hope of finding work, and women in particular being squeezed out of employment. In Ireland this week the CSO announced an unemployment rate of 13.8%, with the number of people unemployed approaching half a million people. The outlook for employment and for vital public services is bleak as governments cut spending in order to satisfy the bond markets. One of the policy suggestions being put forward is that of a financial transactions tax. It not only makes good economic sense - it is also a matter of justice and equity. Support for a financial transactions tax (FTT) has been growing since G20 leaders agreed at their September 2009 Summit in Pittsburgh that the financial sector should "make a fair and substantial contribution" to pay for the extraordinary government interventions that were required to save the private financial system from collapsing under the weight of its own risky investments.

An FTT could raise between €160bn and €700bn depending on the way it is structured and the level at which it is set, according to the International Trade Union Confederation submissions, which are being sent by Congress and trade union centres around the globe to governments in preparation for both meetings. Even a small percentage of the funds raised by an FTT would help put in place a social protection floor, which would give a major boost to tackling poverty. The MDG submission sets out the case for putting an FTT at the centre of an overall package of measures which would also tackle corporate tax evasion and ensure effective regulation of banks and finance.

Instead of simply focusing on spending cuts, governments need to increase revenues to ensure employment, public services and development aid. An FTT would not solve all the world's problems, but it would certainly be a good starting point by moving capital from speculative profiteering to kick-starting the real economy and helping avoid a double-dip recession which would have horrendous consequences for the poorest countries in particular.
The financial burdens imposed on governments by the crisis are not limited to the cost of bailouts, but also include the costs of unemployment benefits, extraordinary job creation (unfortunately not in Ireland..) and other economic stabilisation measures, and the loss of government revenues because of the reduced level of economic activity. All these should be included in the cost of the financial crisis and its repercussions, which have led to major fiscal challenges for governments around the world. Additional government revenues will be needed to stimulate the creation of sufficient jobs to bring employment levels back to pre-crisis levels. Furthermore, several governments have made important commitments for official development assistance and for climate change financing for the coming years.

Congress and Global Unions support the FTT because it will generate important revenues needed to fill the fiscal gap created by the financial crisis and ensuing global recession, along with development assistance and climate-change finance commitments. The European Parliament and the intergovernmental Leading Group on Innovative Financing for Development have issued reports that recognize the positive role an FTT could play. Although the IMF's main report for the G20 on financial sector taxation expressed preference for other options, it concluded that "sufficient basis exists for practical implementation of at least some form of FTT".

A number of civil society organizations, governments and business leaders have supported the idea of an FTT. Along with its revenue-generating capacity, an FTT could contribute to reducing "short-termism", asset-price bubbles and recurrent financial crises, and instead encourage productive job-creating investments in the real economy. The experience with existing transactions taxes shows that such a tax can be successfully applied in one or a few jurisdictions, but an internationally agreed and coordinated implementation process will obviously lead to even more effective application.

ITUC Statement to the UN MDG Summit
ITUC Statement to the IFI Ministerial Meetings

See also: and support for the tax at the TUC Conference

Burma under the current repressive regime is not a holiday Destination, says David Joyce

Manchán Magan quite rightly speaks of the experiential overload that Burma's sacred sights and stunning scenery offer the tourist (Bewitched by Burma, Saturday August 14). However, only peripherally does he actually refer to the nub of the issue - whether tourism to Burma under the repressive State Peace and Development Council (SPDC) military government is ethical or not and if such tourism helps to highlight human rights abuses or legitimizes them in some way.

Lest we forget, in November 2000, the International Labour Organization took the unprecedented step of calling on all governments to take sanctions against the country of Burma. The ILO charged the Burmese military regime with a 'crime against humanity' for its systematic use of forced labour. Up to two million men, women, children and the elderly are forced to work for the Burmese military. They construct roads, railways, dams and army camps. They act as servants and sentries for army officers. Or they dig fishponds, log timber and farm on land that officers have seized. Porters are saddled with heavy loads and forced-marched through the hills, often in front to detonate mines.

Daw Aung San Suu Kyi remains under house arrest and over one thousand political prisoners remain in detention, many of whom have died as a result of ill-treatment. All of this is confirmed by the report to the UN Human Rights Council of the Special Rapporteur Paulo Sérgio Pinheiro on the situation of human rights in Burma, stating that: "Grave human rights violations are committed by persons within the established structures of the State Peace and Development Council and are not only perpetrated with impunity but authorised by law".

All significant economic activity in Burma is controlled by enterprises directly overseen by, or associated with the military and former drug lords. The continuing failure of governments to develop effective international sanctions against the regime, the increasing political and economic support provided to the regime by China and other neighbouring countries, and the limited scope and exclusions in the European Union's "Common Position" are a source of much anger and disappointment to those working for change in Burma. Globally, trade unions have a database of over 325 foreign companies with business links to Burma. Some prominent companies have withdrawn under international union pressure, such as the French multinational hotel chain Accor. But Global Unions is still adding other firms to the list who are happy to do business with Burma and its vicious junta.

The SPDC needs to engage in genuine dialogue with the National League for Democracy and the ethnic nationalities' organizations for the restoration of democracy and peace and needs to implement all the Recommendations of the ILO Commission of Inquiry, to immediately end the use of forced labour and to prosecute those responsible for this crime against humanity. Until this happens, what is needed is increased political, diplomatic and economic pressure, including the application of effective economic sanctions on the regime in order to ensure respect for fundamental rights and democratic rule. A river cruise through Burma's sacred sights and stunning scenery at this time, however unwittingly, merely helps to prolong the agony for the people of Burma.

Useful Links: International Trade Union Confederation (ITUC)



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