European leaders meeting today to discuss ways of boosting economic growth should press ahead with plans for a financial transaction tax (FTT), Oxfam said.
The international agency’s call comes as a fresh assessment by the European Commission of the effect its proposed FTT would have on the European economy adds to a growing body of evidence that it would be positive.
Oxfam is part of the international Robin Hood Tax campaign calling for a financial transaction tax to raise money to help poor people at home and abroad hit by the economic crisis and to combat climate change.
More than 200 organizations have written to European leaders this week urging them to adopt a Robin Hood Tax (example of letter -sent to Angela Merkel- attached).
Nicolas Mombrial, Oxfam’s EU policy adviser, said: “A Robin Hood Tax would raise billions to fight global poverty and help protect Europeans from the mess created by an out of control financial sector.
“The claims of the UK government and other critics that an FTT would hurt growth have been exposed as a self-serving sham. If now is not the time to ask the financial sector to pay its fair share towards global recovery, then when will it be?”
“An FTT just for EU investments and debt reduction, with no substantial share to fight poverty and climate change, would be a terrible waste of an historic opportunity. We are watching François Hollande as he promised to spend part of the FTT cash for overseas aid.”
The European Commission’s assessment shows that implementing an FTT would lower growth by an average of just 0.004 per cent per year in the coming decades (-0.28% by 2050) and that if a significant portion of the revenue was invested in “growth enhancing public investment”, the overall effect would be positive.
Leading economists Stephany Griffith Jones and Avinash Persaud recently published a paper (pdf) showing that an FTT would increase European growth by a minimum of 0.25 per cent by 2050.
The EC’s latest estimates correct its previous assessment which estimated a negative effect on growth of 0.53 per cent by 2050 but was based on the false assumption that all investment is financed by issuing new shares and ignored the benefits the revenue could bring. The UK government and financial sector lobbyists have used the assessment to falsely claim that an FTT could curtail growth by 1.76 per cent.
The UK, ironically home to the largest existing European financial transaction tax its 0.5 per cent stamp duty on share transactions, is fighting a rearguard action against the FTT. By contrast the tax is supported by Germany, France, Spain, Italy and a number of other European countries.
More than 1,000 leading economists, including Joseph Stiglitz and Jeffrey Sachs, as well as Bill Gates and George Soros, have also expressed public support for an FTT.
This week’s letter to European leaders signed by 200 organizations representing European civil society said:
“The FTT is an idea whose time has come; a tax that will boost growth, help to eradicate poverty and fight climate change, and invest in a fairer society for the next generation. A legacy of which you and all of Europe’s leaders could be proud.
“As well as curbing destabilising speculation in financial markets, and raising much needed funds for social spending in Europe, an FTT could help overcome the injustice faced by poor families who are still suffering from an economic crisis that was not of their making.”
This week: Campaigners in over 35 countries calling for an FTT – Brussels rally today at 5pm
Pressure is also building beyond Europe’s borders with a total of 35 countries taking part in a Robin Hood Tax global week of action. In the US, thousands of activists gathered in Chicago to call on President Obama to back at FTT. In Brussels, Robin Hood will join a rally, organised by the European Trade Union Confederation (ETUC), today (23 May) from 5 to 6pm at Rue de la Loi (Rond-Point Schuman) which will gather around 200 people.
Notes to editors
** The nine countries that asked the Danish EU Presidency to press ahead with an FTT represent 90% of Eurozone GDP and 67% of EU GDP and include four of the five biggest economies in the EU. A tax on transactions by these countries alone, even if just implemented on equities and derivatives, would be a very significant step and has the potential to raise €38 billion every year.
** Download a copy of the civil society letter (pdf 116kb)
Angela Corbalan on + 32 (0) 473 56 22 60 or firstname.lastname@example.org