Vol. 542 No. 6
75 Mr. M. Higgins asked the Minister for Finance his views on the issue of the Tobin tax; if the tax has been raised formally or informally at the Council meeting of the Belgian Presidency of the European Council; and if he will make a statement on the matter. [23737/01]
As the Deputy will be aware, I have given my views on the Tobin tax issue on several occasions, most recently in reply to a written parliamentary question put down by Deputy Proinsias De Rossa on 3 October.
In its currently proposed form, the tax would impose a world wide tax on all foreign exchange transactions to reduce exchange rate volatility and to raise revenue to support international development. However, this is easier said than done, because many difficulties have been identified by commentators in relation to the tax.
A recent, major report – the Zedillo report – that was commissioned by the UN Secretary General to examine the issue of development finance concluded, inter alia, that “the merits of a currency transaction tax remain highly controversial.” The report stated, “further rigorous study is needed before any definitive conclusion is reached on the feasibility and convenience of a Tobin tax.” In November 2000, a report from the Finnish Ministry of Finance also pointed to the many problems associated with the Tobin tax proposal.
The issue of the Tobin tax was discussed at the informal ECOFIN meeting at Liege on 22 September. The Belgian Presidency indicated that it wished to pursue the matter in the context of a general study to be carried out by the Commission on the issue of globalisation. However, most finance Ministers, myself included, continue to have reservations about the Tobin tax proposal and it is not clear that a further examination of the issue by the Commission will ensure satisfactory answers are given to the many real questions concerning the tax including, and not least of which, are the difficulties relating to practical implementation of the tax.
Nevertheless, at the most recent formal ECOFIN meeting on 16 October, it was agreed that the Commission would carry out a study on globalisation and that this study would, among other things, examine the arguments for and against a Tobin tax.
Notwithstanding, the Minister's fine explanation, does he not still hold to the view he expressed at the Committee on Finance and the Public Service some time ago that this proposal was off the wall?
The Deputy sums me up correctly.
