Brown stelt belasting van de financiële sector voor (en)
EUOBSERVER / BRUSSELS - A call by UK Prime Minister Gordon Brown i over the weekend for a global tax on financial transactions received some support in Brussels on Monday (9 November), although strong opposition from the US and other quarters looks likely to bury the idea again.
Former Danish prime minister and current president of the Party of European Socialists, Poul Nyrup Rasmussen, said he wanted to "hail Gordon Brown on this courageous speech."
A spokeswoman for the European Commission restated the position held by president Jose Manuel Barroso i that the tax idea has "potential," but that "by its very nature such an initiative would need to be implemented globally."
Last month EU leaders asked the commission to examine ways of "innovative financing," including the feasibility of a tax on financial transactions, to help less-developed countries and possibly help reduce national budget deficits.
However the surprise support for the initiative expressed by Mr Brown at a meeting of G20 i finance ministers meeting on Saturday in St. Andrews, Scotland, related to possible mechanisms to fund future bank bailouts.
In the face of rising back bonuses, governments are determined that financial institutions must pay for their own bailouts in the future.
Opposition
The UK prime minister appeared to quickly backpedal on the idea on Sunday following a chorus of criticism from the US, Russia, Canada, and the International Monetary Fund, however. European Central Bank president Jean-Claude Trichet said: "I personally am not convinced."
In an article in the Financial Times on Monday, Mr Brown appeared to shift his support to other possible mechanisms, including insurance levies, in order to "protect against future risk and to compensate for wider [bail-out] costs to the general public."
While the lack of US support is likely to kill off the proposal for the time being, French finance minister Christine Lagarde came out in support of Mr Brown by saying the proposed tax would be a "very good thing."
Italian officials have also expressed some support for a financial transaction tax in the past, and German Chancellor Angela Merkel i had hoped to bring unified EU support for the idea to the recent G20 leaders meeting in Pittsburgh.
Long history
Originally proposed in 1971 by Nobel Prize laureate James Tobin as a means of reducing speculation in global currency markets, supporters of a modern-day Tobin tax on all financial transactions say it would help raise valuable funds for the good of society.
Having lain dormant for 20-odd years, the idea resurfaced in the 1990s during the Asian financial crisis, and was recently raised by the chairman of the UK Financial Services Authority, Adair Turner.
While Mr Brown's proposal relates to bank bailouts, others have envisaged such a tax as helping to resolve global problems such as financing the fight against climate change or the supply of aid to countries that have suffered natural disasters.
Mr Rasmussen on Monday said a tax as small as 0.05 percent on G20 financial transactions would be enough to finance the Millennium Development Goals. "You can see we are talking about big money," he said.
Critics of the scheme cite its un-workability, however. "The problems of implementing the Tobin tax are huge," says Karel Lannoo, chief executive officer with Brussels-based think thank, the Centre for European Policy Studies. "I would not overburden the G20 with this now," he told EUobserver.
Implementation complexities include deciding on which fields would be covered by the tax scheme and preventing against uncooperative jurisdictions.
Mr Brown's surprise announcement on Saturday is seen by analysts as a bid to rally public support ahead of a general election in six months time which he is expected to lose.