Message-ID: <Pine.BSI.3.96.991127120610.15920D-100000@ux1.cyberenet.net> Date: Sat, 27 Nov 1999 12:18:54 -0500 From: mailto:tuandbob@CYBERENET.NET Subject: Re: DEVEL-L Digest - 25 Nov 1999 to 26 Nov 1999 (#1999-189) To: mailto:DEVEL-L@LISTSERV.AMERICAN.EDU
On Sat, 27 Nov 1999, Automatic digest processor wrote:Who Determines:
-What an "acceptable" level of tax is? -How the funds will be disbursed? -How the list of "acceptable" projects will be protected from "pet worthy causes"? -Which multiple "miniscule" increases are "worthy"?
These problems have not been solved for any government yet.
> Date: Fri, 26 Nov 1999 21:56:54 -04
> From: Kerry Miller <mailto:kerryo@NS.SYMPATICO.CA>
> Subject: CEED: Tobin Tax Update
>
> Centre for Environmental Economic Development
> 11/1999 NEWSLETTER
>
> HEADLINE 3 -- ACADEMIC UPDATE: More on studies by Schmidt and Spahn
>
> Basically, there are three newer topics to be aware of: the
> Spahn version; the Schmidt solution; and the derivatives question.
>
> 1) the Spahn version of the Tobin Tax addresses the problem of
> taming volatility. This has been a recurring criticism: that the tax
> would either be too small to tame volatility, or too large which would
> dry up revenue. Paul Bernd Spahn did a study for the IMF in 1996 in
> which he critiqued Tobin's original proposal, and counter-proposed a
> two-tiered tax. One tier would be a miniscule tax on transactions
> within
> an acceptable band of rise and fall (similar to the snake of EMS fame),
> which would raise considerable revenue but not distort trades. The
> other tier would be a punitive tax on any spikes of volatility outside
> the band (major deviations), designed as a macroeconomic tool to prevent
> the destructive spikes. This would be at such a high percentage as to
> prevent transactions outside the band. Both tiers could be used as
> macro tools: the first tier percentage could be ratcheted up to shrink
> undesirable market volume (the $1.5 trillion daily), or down if too much
> shrinking occurs. The Spahn design is elegant, but it might raise only
> $40 to $50 billion, instead of the $200 to $300 billion projected for
> the
> straight Tobin model. We met with Spahn in Koln during June of this
> year.
> He doesn't want it called the Spahn tax.... says nobody should want a
> tax named after them...he's happy with the Spahn version of the Tobin
> Tax....
>
> 2) The Schmidt solution to the enforcement problem. Typically, someone
> will raise the issue of enforceability, and criticize the tax as
> unenforceable without universal adoption and cooperation. The economist
> Rodney Schmidt, formerly with the Canadian Finance Ministry, suggests
> a mechanism of using the settlement sites of trading rather than the
> dealing sites. A new international settlement mechanism called the
> Continuous Linking Service (CLS) will begin next year, put together by
> the major players to make sure there is instantaneous recordation of all
> transactions. The CLS provides the ideal location for a tax that could
> be automatically recorded, deducted, and not avoided. His paper goes
> into
> all the technical mechanisms of how settlements currently work, how they
> will work under the CLS, and how the Tobin Tax could be enforced
> utilizing
> them.
>
> 3) The derivatives question. Tobin's original proposal was written up
> in 1978, and he proposed a tax on spot transactions. The derivatives
> market was not the problem then that it is now. Most new versions of
> Tobin Tax proposals recommend including the various derivative
> instruments
> in the tax base. The problem up to now has been enforcement. Schmidt
> sees most derivative types as going through the CLS settlement process,
> thus tackling the enforcement problem. Also, the common-sense argument
> still holds: loopholes have always existed, but taxes need to be
> passed anyway....and do the best we can to close the loopholes.
>
> (Summary of issues, by Ruthanne Cecil, Tobin Tax Initiative USA)
>
> --------------------------------------------------------
> HEADLINE 4 -- NEW RESOURCES-- the Arcata Proclamation!:
> Since so many of you
> asked, here is a copy of the Arcata Proclamation, so you
> can download it and modify for your town councils. If you send
> a request, we will mail you a color copy of the now-
> famous Arcata Proclamation, a model proclamation on the
> Tobin Tax suitable for framing, and suitable for your
> city council to pass as well... For those of you who have
> requested it, packets will be on the way in early December....
>
> --------------------------
>
> PROCLAMATION OF THE ARCATA CITY COUNCIL
> ON THE TOBIN TAX
>
> WHEREAS over $1.5 trillion moves daily through currency
> exchange markets around the world, and over 85% of those
> transactions are of a speculative nature, where traders
> bet on whether currency values and interest rates will
> move up or down; and
>
> WHEREAS such volume and volatility disrupts the ability
> of nations to establish equitable and just economic
> policies; to intervene to protect their own currencies;
> and to provide support for needed social and environmental
> programs; and
>
> WHEREAS recent financial crises and currency devaluations
> tend to exacerbate existing problems such as price
> increases, higher unemployment, plant closures, social
> unrest and human rights violations; and to burden indigenous,
> poor and middle-income populations most heavily; and
>
> WHEREAS excessive speculation could be curbed by a very
> small tax of between 0.1% and 0.25% on each cross-border
> currency transaction (as proposed by Nobel prize-winning
> economist James Tobin -- "Tobin Tax"); and such a tax would
> reduce incentives for overnight speculation while remaining
> small enough to leave longer-term investments intact; and
>
> WHEREAS the revenues from a Tobin Tax, projected at between
> $150 and $300 billion a year, would provide the resources
> urgently needed to wipe out extreme poverty, provide basic
> social services and mitigate environmental destruction
> globally; and collection, enforcement and allocation aspects
> are considered to be economically feasible:
>
> THEREFORE BE IT PROCLAIMED THAT, The City Council of the
> City of Arcata urges governments around the world to immediately
> cooperate to establish Tobin-style taxes on foreign currency
> exchange market transactions, collected and distributed in a
> fully transparent and accountable manner, with the revenue
> dedicated to basic and urgent human and environmental needs
> and to ecologically sustainable jobs within less-developed countries.
>
> -----------------------------------------------
>
> HEADLINE 5 - TEXT OF FRENCH AMENDMENT ON THE TOBIN TAX
>
> Here is the French amendment, which was hotly debated and
> defeated in late October. This English translation comes to
> us, thanks to Yann Galut, Member of Parliament, France:
>
> Proposition for the Financial law for the year 2000
>
> AMENDMENT
> presented by
> Mr. Yves Cochet, Yann Galut, Jean-Claude Lefort,
> Ms. Chantal Robin-Rodrigo, Mr. Georges Sarre
>
> Proceding article 18, insertion of the following article:
> Proceding article 985 of the General Tax Code insertion of an article
> 985bis:
>
> =AB Art.985bis - this article establishes a fixed tax on monetary
> exchanges, be it cash or credit, amounting to 0.05 %.
> The following operations should be exempted from this tax:
> - purchases and sales within the European Union;
> - exportations and importations of goods and services;
> - direct investment as described by the decree n=B089-938 of 12/29/89
> which regulates foreign financial relations;
> - exchange operations which carried out by individuals and are less than
> 500,000.00 F.
>
> This Tax applies to loan establishments, institutions, and services
> which are discussed in article 8 of the law n=B084-46 of 01/24/84 relative
> to the activity and the control of loan establishments and investment
> enterprises encompassed by article 7 of the law n=B096-597 of 7/2/96
> pertaining to modernization of financial activities performed by
> individuals or enterprise as discussed by article 25 of the law n=B090-614
> of 7/12/90 relative to the participation of financial institutions in
> battle against money laundering of capital from drug trafficing.
> This tax is based in the same guarantees and limits as the deductions
> mentioned in article 125A.
> This tax is to be effective as of 7/1/00.
> A decree fixes modes of application of this article.
>
> SUMMARY
>
> An objectif of this amendment is to establish a tax on speculative
> movements of capital (the Tobin tax).
> Creation of such a tax, amounting to 0.05 %, is intended to counter
> speculative movements of capital which largely contributes to periodic
> apparitions of serious economic crisis.
> This law, evidently, does not intend to penalize movements of capital
> related to legal trade (exportations and importations of goods and
> services, direct investment). Lowering this tax to the level defined by
> this amendment allows to limit its impact to speculative operations.
> This tax targets loan establishments and investment enterprises as well
> as their form of establishment liquidation, and government collection
> would be similar to that of article 125 A of the General Tax Code for
> deductions on investment: generating fixed returns.
>
> ---------------------------------------------------------
> HEADLINE 6 - ANNOUNCEMENTS
> See you in Seattle!!! Go to the WTO!
> ---------------------------------------------------------
> The Tobin Tax Update is a monthly newsletter of the Tobin
> Tax Initiative USA. The Tobin Tax is a proposal to tax
> cross-border currency transactions, for the purpose of
> reining in market volume and volatility; restoring national
> sovereignty over monetary policy; and raising substantial
> revenue for urgent global environmental and human needs.
> -------------------------------
>
> Tobin Tax Initiative USA ...
> Ruthanne Cecil, Project Director and Newsletter Editor
> see our website at <http://www.tobintax.org>
> email <mailto:cecilr@humboldt1.com>
> Tobin Tax Initiative USA, International Innovative
> Revenue Project, Center for Environmental Economic
> Development, P.O. Box 4167, Arcata, CA 95518-4167 USA
> TEL (707) 822-8347 FAX (707) 822-4457
> Building Local Support for Global Solutions...