Vol. 521 No. 3
23 Mr. Bell asked the Minister for Foreign Affairs if he will indicate the Government's attitude to the Tobin tax on international speculative capital flows; and if the Government has stated its attitude towards the proposals. [16825/00]
First advocated over two decades ago by Nobel Prize-winning economist, James Tobin, the currency transaction tax or "Tobin Tax" is intended to be applied to every international financial market transaction to slow down currency speculation and capital flight from weak economies. There was renewed interest in the proposed tax in the wake of the Asian financial crisis in 1997-8. Many championed the tax as a way to raise significant funds for development assistance.
The proposal for such a tax addresses important development objectives such as reducing volatility on the international financial markets and mobilising increased resources for development assistance. However, there appears to be a range of serious practical difficulties in its implementation which detract from its potential. To become a reality, a Tobin tax would require close co-operation on a global scale. It would, for example, have to be introduced simultaneously in all major economies to avoid the flight of capital to a jurisdiction which did not enforce the tax. A unilateral application of the tax would carry obvious risks for the economy of the country in question.
