A Financial Transaction Tax (FTT) could have a major positive impact on people’s well-being and that of the planet, says a new CIDSE report
(Brussels, 8 June 2011) A Financial Transaction Tax (FTT) could have a major positive impact on people’s well-being and that of the planet, says a new report by the international alliance of Catholic development agencies CIDSE, issued ahead of next week’s meeting of EU Finance Ministers and an upcoming EU Impact Assessment of the FTT. The FTT for people and the planet – financing climate justice sets out how part of the over € 465 billion estimated yearly global revenue of a tax on financial transactions, if introduced at an average rate of merely 0.05%, could finance the fight against climate change.
The fight against climate change is one of the global challenges governments continue to fail to stump up the money for. In decades of international climate negotiations money has proven an important stumbling block. Last December in Cancun, governments agreed to create a Green Climate Fund in the United Nations, which is to receive and distribute up to €70 billion (US$ 100 billion) a year from 2020, but nobody knows yet where this money is going to come from. In times of austerity, governments are reluctant about climate action weighing on their national budgets.
“There is no excuse for procrastination. The FTT is a credible mechanism by which to generate substantial amounts of money to help fill the climate fund and finance other global challenges, without requiring additional sacrifices from the taxpayer,” said CIDSE President Chris Bain.
In fact, the FTT would mainly impact short-term trading which has no added value for the real economy and contribute to the stabilisation of financial markets by reducing speculation. While it is widely acknowledged that the tax can be put in practice (including 2010 studies by the International Monetary Fund and the European Commission confirming its feasibility), the necessary political will is lacking. Countries like Germany, France, Belgium and Luxemburg are supportive, many others including the United Kingdom, the United States and the Netherlands are still unwilling to consider taxing financial transactions.
“Naysayers should realise that if the well-being of people and the planet are at risk, the future of the financial sector is too. The right thing to do now is to put people first, supporting the introduction of a Financial Transaction Tax for a better future,” said Bain.
Raising sufficient money is not enough, it will have to be administered and spent well to make a positive and lasting impact. Decades-long experience working with partners in the global south to bring about change has made this clear. Based on this experience CIDSE makes two recommendations:
- Cross-sector coordination must be an essential function of the mechanism allocating climate finance, because the fight against climate change covers several sectors of government activity including finance, agriculture, food security, water management, health, safety, and infrastructure.
- All climate funding must respect people’s social and environmental rights, guaranteeing meaningful and effective consultation of local communities so that climate action does not take place at their expense.
“If money is managed and spent well, taking the rights of the poorest into account, we can make a serious attempt to fight climate change. The time has come for the financial sector to prove it can work for people and the planet,” said Michele Maynard of the Pan African Climate Justice Alliance (PACJA), a partner organisation of CIDSE.
Roeland Scholtalbers, scholtalbers(at)cidse.org, +32(0)2 230 70 82, +32(0)477068384
Notes to the editors:
CIDSE is an international alliance of Catholic development agencies. Its members share a common strategy in their efforts to eradicate poverty and establish global justice.
- On Thursday 9 June, the German Bundestag and the French Assemblée Nationale hold simultaneous sessions to discuss a joint initiative on the Financial Transaction Tax. Next week, EU Finance Ministers will discuss the tax when they meet in Brussels.
- Financial Transaction Tax (FTT) fact sheet, CIDSE, June 2011
- International taxes on financial transactions: Responding to global challenges – towards a fairer sharing of costs, CIDSE position paper, November 2009