At a historic Civil G20 Dialogue meeting in Seoul last week, one of the G20 Sherpas (as the top negotiators for the G8 and G20 Summits are called) told me, "Please keep pushing on the financial transaction tax. We need you to do so. It's like with the landmines treaty. Governments said it couldn't be done. You in the NGOs kept pushing. And it happened. This can happen too. It will happen – if you keep pushing us."
The Financial Transaction Tax, or the Robin hood Tax as it has also be called, could be one of the most important things the G20 could do to help ensure the funding needed for moving forward on poverty reduction and achieving the Millennium Development Goals and helping low income countries cope with the impacts of climate change, at a time when fiscal deficits are beginning to threaten aid flows.
It is unlikely the Seoul G20 Summit in November will make a decision on this important proposal. But if the issue can be kept on the table and progress can be made in negotiations, then the chances of success are greatly improved for the FTT getting the nod at the French G20 in November of 2011. President Sarkozy of France has been a strong advocate of the FTT and he has already said it will be the main initiative he will be pushing when he hosts the next G20 in 2011.
The Financial Transaction Tax is gaining support internationally. At a side event during the UN MDG Summit on September 21, 2010, the Leading Group on Innovative Financing for Development which has the support of 60 countries issued a Declaration in support of a Financial Transaction Tax. The technical feasibility of such mechanisms has been demonstrated by the IMF and a Report by a Committee of Experts last year.
The Financial Transaction Tax, or the Robin Hood Tax as it has also been called, could raise hundreds of billions of dollars that could be used to reduce deficits in developed countries as well as provide financing for poverty reduction and climate change adaptation in developing countries which donor countries seem increasingly hard pressed to come up with. By imposing a very small fee (a suggested 0.05%) on financial market transactions, the global financial sector, which benefitted most from the bail-outs and rescue packages, and who now pay far less taxes than other business sectors, will be made to contribute their fair share to a global recovery effort. The FTT would have the added advantage of discouraging excessive speculation.
The Civil G20 Dialogue held in Korea was the first time G20 Sherpas have met as a group with global civil society representatives. G8 Sherpas have been meeting every year for the past 5 years with civil society. The G20 now also includes 5 additional country representatives – two from Africa, two from Asia and Spain – which is the result of pressure from civil society groups for a more representative and accountable forum.
Thanks to Dennis Howlett for this blog. Dennis is the National Co-ordinator for Make Poverty History Canada