6 April 2010
Leaders of the EU issued a statement supporting the idea at their recent spring summit in Brussels and the EU's executive, the European Commission, 'will shortly present a report on possible innovative sources of financing such as a global levy on financial institutions' the statement noted.
Whilst there is general agreement about the need for increased international banking regulation, there are believed to be a number of alternative proposals under consideration.
The 'Robin Hood tax' or ‘Tobin tax’ as it is also known, (named after the Nobel Prize-winning economist who first suggested the idea), calls for a tax on foreign exchange transactions that would be applied uniformly by all major countries. A tiny amount (less than 0.5%) would be levied on all foreign currency exchange transactions to deter speculation on currency fluctuations.
When levied on the billions of dollars moving around the global finance system every day through transactions such as foreign exchange, derivatives trading and share deals, it can raise hundreds of billions of dollars every year.
Whilst support for such a tax is not universal (see the recent ABC report) 350 economists from dozens of countries, including two Nobel laureates and prominent figures such as Prof Jeffrey Sachs, have signed a letter addressed to the G20 calling for the introduction of such a tax.