Friday, 11 September 2009

The Steinbrück tax proposal: No reason for too much optimism

Peer Steinbrück (see photo), Germany’s minister for finance, and Frank Steinmeier, his colleague in the foreign ministry, are in favour of a global financial transaction tax. They announced their proposal in a conversation with the national newspaper Süddeutsche Zeitung. "The costs for the crisis must not stay with the small and medium taxpayers", they said. "There must be a fair burden sharing." They suggest an international financial transaction tax, which is levied not only on currency transactions, like the Tobin Tax, but on all kinds of financial transactions, including equity, certificates and derivatives.

The idea had been initially suggested last year by the Vienna Institute for Economic Research WIFO (>>> Stephan Schulmeister, Margit Schratzenstaller, Oliver Picek, General Financial Transaction Tax Motives, Revenues, Feasibility and Effects). They propose a tax rate of 0.05%. Steinbrück also said, he would bring the issue on the agenda of the Pittsburgh G20 summit. The initiative comes two weeks after the head of the British supervisory authority, Lord Turner, had proposed to introduce a currency transaction tax.

Although the initiative gives a strong boost to civil society advocating the Tobin Tax or variants of it such as the Spahn Tax for decades “we should not be overoptimistic”, says Attac Germany’s Peter Wahl. According to him, the proposal has very much to be seen in the light of the German election campaign in the run-up to 27 September. “The Social Democratic Party (SPD) is, like all parties of New Labour, in a desperate situation. In recent regional and European elections the SPD was suffering the deepest decline in its 100 years of existence. At the same time the new left party DIE LINKE is getting stronger with the crisis and the issue of social justice becoming more and more to the forefront.”

Furthermore, Wahl explains, the Steinbrück proposal has not been agreed with the chancellor. Merkel has not yet reacted. But given her ideological and political dependence on the finance industry, it would be a miracle if she would accept to present the proposal in Pittsburgh. Last but not least, Steinbrück says that such a tax would have to be implemented at global level. This is a preventive explanation of failure, because he knows very well that Wall Street and the London City will not allow their governments to accept such a proposal. Nevertheless, civil society should use the opportunity and intervene strongly into the debate.

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