Tuesday, 9 June 2009

Bernard Kouchner suggests a tax on foreign exchange transactions

As French Foreign Minister Bernard Kouchner stressed, development aid is a crucial tool to fight the impact of the recent financial turmoil on developing countries but not enough. According to him, innovative development funding is decisive, especially in the areas of education, health and environment. A pilot group in charge of thinking about solidarity contributions in favour of development was established in 2006 following an initiative from France, Brazil, Spain and Norway. The pilot group is a kind of think-tank and gathers 58 countries to which NGOs and international organisations are associated. France is currently chairing the group which gathered on 28 and 29 May in Paris.

Following a suggestion by Bernard Kouchner, a working group has been created to evaluate the technical and legal feasibility of a tax on foreign exchange transactions. The implementation of this tax could save millions of lives as well as facilitate the funding of global common goods in order to resolve the economic, social and environmental issues created by globalisation. This tax would not really affect the global economy as only 0.005% would be taken from foreign exchange transactions. According to Alain Joyandet, the French Secretary of State for Cooperation, between $30bn and $60bn per year could be raised through such a tax.

France and Belgium have already established a legal framework: France passed a law in December 2001 imposing this tax, but it will come into effect only if it is enforced at the European Union level; Belgium did the same in 2004. Civil society actors, mainly NGOs, are supporting the proposal: According to Jean-Louis Vielajus, president of Coordination SUD, "NGOs have asked the implementation of a tax on foreign exchange transactions for several years. We rejoice with the support of Bernard Kouchner and Alain Joyandet and urge them to bring this question at the European level and within the United Nations."

However, much effort remains to make the proposal a reality. The proposal of Bernard Kouchner has met the opposition of the French Economy Minister, Christine Lagarde, who declared that "nothing is prepared for the moment". Instead, she encouraged governments to implement taxes on airplane tickets (also known as "Chirac Tax") which is currently working. The proposal has also met the opposition of Great Britain and the United States, two of the biggest financial markets of the world.

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