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What is the Tobin tax?
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By Pablo Rodriguez Suanzes
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On March 11, 2002 died on American economist James Tobin, Nobel Prize laureate in 1981. For decades, Tobin was a recognized expert among his peers. Professor at Yale and Harvard and a member of the Governing Council of the U.S. Federal Reserve. However, towards the end of his life, he became well, and to his chagrin, a reference to the antiglobalization movement. What is the Tobin Tax? Currently-incorrectly-called Tobin tax to a proposed tax on international financial transactions. A kind of added tax or fee on any movement, or the sale of bonds or derivatives contracts financieros.Sin But the original Tobin tax, proposed by the Nobel, goes back to the early 70's and was a " commission "on currency speculation. Currency only.
The reason is simple: in 1971, U.S. President Richard Nixon, a stroke ended the convertibility of gold / dollar, revolutionizing the monetary model emerged from Bretton Woods in 1944.Para avoid currency speculation and enhance stability The professor suggested "throwing a few grains of sand in the wheels of international finance." That is, discourage movements to make money from fluctuations in exchange rates. Why was transformed her original idea? The crisis of the late 90s of last century gave impetus to call the antiglobalization movement, which had its heyday in the demonstrations against the summit of the World Consumption November 1999 in Seattle (USA) and the World Social Forum in Porto Alegre (Brazil) 2001.En December 1997, left-wing French magazine Le Monde Diplomatique, "directed by Spanish Ignacio Ramonet, devoted an editorial to the subject was very successful , proposes to implement immediately a Tobin Tax on financial transactions. "Complete freedom of capital movement destabilizes democracy. It is therefore important to implement deterrent mechanisms. One of them is the Tobin Tax is (...) tax is so modest, all transactions on the exchange markets to stabilize while providing income for the international community. With an 0.1% annual rate achieved Tobin about 166,000 million, two times the annual amount needed to eradicate extreme poverty now and the start of the next century, "said the proposal caught on publicación.La and six months later, he created ATTAC (Association for the Taxation of Financial Transactions and for Citizens' Action), a very active group today continues to pursue the same objetivos.Ahora same, the same idea, with different names from different countries is promoted. In the United Kingdom is the Robin Hood Tax. In Germany, the 'gegen Armut Steuer "(tax poverty). In Italy, the movement Zerozerocinque (zero zero five). And in Spain, Robin Hood.Tobin rate, before dying, said in retreats and other occasions that Attac "abused their name," pointing to the spurious use of your idea and recalling that, as an economist, he was favorable to the IMF or the World Bank. Are there other similar ideas? In 2004, Belgium adopted a law 'inspired' on the call rate Spahn, by economist Paul Bernd Spahn, who proposed it in 1995 and revised slightly después.Spahn Tobin thought that was difficult to apply therefore suggested a tax of two parts: a minimum rate on foreign exchange operations (0.01%) but that would be combined with a much more severe (above 50%) with obvious speculative attacks on currency . On September 16, 1992 was the famous "black Wednesday" in England, when George Soros, now guru, made £ 10,000 million to DM to re-sell them. Earning more than 1,000 million dollars and taking the British currency the European Monetary System (EMS). Belgium came to submitting their proposal to Frankfurt for study, but the European Central Bank, while recognizing the "good intentions" of the proposal Belgium ruled against, calling it "highly questionable." What amount could have a transaction tax? There is no strong opinion about it. James Tobin had in mind a specific amount. Sometimes he spoke of 0.1% and others 0.5%, but in vague terms. In 1978, in a speech entitled 'A proposal for international monetary reform', said the rate would be "proportional to the volume of the transaction." Last fall, the EU argued that pack a 0.1% rate on financial transactions involving the sale of shares or bonds and 0.01% if financial derivatives. How would raise this much? Algirdas Semeta, European Commissioner for Taxation and Customs Union, estimated that these types would be collected, from 2014, about 57,000 million per year, which would be shared by the EU budget and from different countries UE.Un of Ideas Foundation study (linked to the PSOE) in 2010, led by Nobel Joseph Stiglitz estimated that the introduction of the levy, with a rate of 0.05% and no reduction in volumes recruitment, Spain would raise each year 6,300 million euros. Europe, 586,000 million and the entire planet over 1.3 billion. "If we look at the effects for Spain can be seen that even with a reduction of 65% of trading volume, could be raised to 2,200 million euros. Compared potential revenue in the world seems a smaller amount, which is due to the small size of financial markets in Spain, "said the report (page 61). ATTAC believes that" Europe can make in the next income sa the 195,000 million euros. In Spain could become captured more than 6,000 million euros. "For Oxfam," a tax of 0.05% on international financial transactions would raise 300,000 million extra per year to combat poverty here and around the world " . Is it really feasible that? efficacy aside, one of the recurring criticisms of such taxes is that, in reality, it would be difficult to implement them, since large corporations would do everything possible to find tax forms to help them avoid them. As an example, in places close their agreements (tax havens) more seguros.Hace just over two years, when the recurrent debate on the Tobin tax in vogue again, Paul Krugman, the most despised, noting that "although the 'traders' are all over the world, most of its operations are located, that is, payment is hac - in a single institution based in London." Aswath Damodaran, a finance professor at the Stern School of Business at New York University, believes that it is not so easy and gives four reasons. First, because there is a basic inconsistency in the reasoning of the critics. What is the purpose of taxing financial transactions? Does it increase revenue or to punish the 'evil' speculators? If the latter, and it works, you actually leave to enter the money, because the operations would decrease. Politicians should, first, aclararlo.En secondly, because the difference between speculators and investors is far from clear. Who is able to precisely define the difference, if any? The third point is that the costs on the liquidity of the system would be remarkable. Something similar to what happened in the markets following the ban on short sales ('short selling'), as noted by Marco Pagano Alesandro Drinking and after studying data from 30 países.Y the last, responding to Krugman, is that even today are concentrated movements, if legislation was changed, change the way of proceeding, and any country would break the equilibrium favoring tasas.El operations without IMF, at the time of Dominique Strauss-Kahn was of the same opinion: current technology and sophisticated mechanisms to favor to try to evitarlo.Por it off. Who would collect the money? ~ Tobin himself suggested that xs23/catala/articles/2001/tobin/tobin.htm administer the IMF or the World Bank, but that part of the History remembers little. What do European authorities? For the past two decades, countries have different thinking and even (as Sweden at different stages) a tax rate applied to certain transactions, but the idea has not been translated yet never in a widespread movement. In the political opposition, the markets, but also many economists who believe that the damage to the flow of capital would be more harmful than the tax benefits provided. This is what happened in Sweden in the late 80's, when rates capitales.Sin leak caused But in recent months, French President Nicolas Sarkozy has moved heaven and earth to convince its European partners the urgent need to introduce it. Interestingly, the French Socialists in the mid-90 and included proposals in their manifestos very similares.El September 28, 2011, the European Commission approved the project to create a "tax on financial transactions." He said the Commission President, Jose Manuel Durao Barroso, "has come time for the financial sector back to society part of the contribution it has received. "Germany and France leading the proposal, which has front and militant opposition in the UK. Earlier this month, Mariano Rajoy announced during the visit of Gallic chief of our country, which was in favor of the rate. Who is opposed? oppose the measure are companies, banks, investment banks, hedge funds and other investors. Jean-Claude Trichet, former presdiente the ECB, said when he was Governor of the Central Bank of France that the idea "had more disadvantages than advantages." British Prime Minister, David Cameron, is the political leader who is getting hit more, believing that the UK would especially penalizado.En fact, the UK and has a particular rate. Since 1808 the UK has called 'Stamp Duty Reserve Tax', which levies a 0.5% (up to 80 years came to be in the 2 %) the sale of acciones.Aunque there are ways to avoid paying and does not affect everyone, when in late 2009, the EU resumed the debate on these measures, Xavier Rolet, chairman of the London Stock Exchange, said before the European Parliament that the existence of Stamp Duty is deeply damaging to the economy of the UK data británica.Con Institute of Fiscal Studies, said the Stamp Duty limited "stock rotation by 20%" and that, to reduce the rate in half, serve to trigger the stock price by 6.25%. A 2007 report prepared by Oxera concludes that while "the Stamp Duty 2005-2006 generated 3,000 million pounds for the British Treasury is not of a tax 'painless,' he simply paid by the rich and faceless institutions of the City. It actually has a detrimental effect on the entire economy and all income groups, an effect that far exceeds the revenue it generates, so it should be reassessed. The tax is damaging pensions and savings of citizens. "
The economist James Tobin gave its name to the tax on financial transactions that Merkel and Sarkozy want to push.
The EU debate a transaction tax