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Dáil Éireann debate -
Tuesday, 10 Jun 2003

Vol. 568 No. 1

Written Answers. - Tax Code.

Jack Wall

Question:

288 Mr. Wall asked the Minister for Finance if he will investigate the proposals in correspondence (details supplied); his views on its determination; and if he will make a statement on the matter. [15942/03]

I have replied to a number of parliamentary questions from Deputies, most recently on 7 May 2003, in this regard.

The issue of the Tobin tax has been considered in a number of fora, including the informal ECOFIN meeting at Liege on 22 September 2001. The Belgian Presidency indicated that it wished to pursue the matter in the context of a general study to be carried out by the EU Commission on the issue of globalisation. However, it would be fair to say that most Finance Ministers, myself included, continue to have reservations about the Tobin tax proposal, and believed that it was not clear that a further examination of the issue by the Commission would ensure that satisfactory answers would be given to the many real questions concerning the tax including: the difficulties relating to practical implementation of the tax; its doubtful effect on short-term speculative capital movements; its conflict with the basic tenet of free capital movement in the EU; its disproportionate effect on small business and consumers; the probability that the tax would simply drive participants into other non-taxable alternatives; and the negative impact on liquidity in the foreign exchange market.
Nevertheless, at a formal ECOFIN meeting on 16 October 2001, it was agreed that the Commission would carry out a study on globalisation and that the study would examine the arguments for and against a Tobin tax. That study, Responses to the Challenges of Globalisation, was published on 14 February 2002. On the matter of the Tobin tax, the study concluded that, "while as a source of additional revenue a currency transaction tax may look appealing, its feasibility is, however, not demonstrated".
I remain unconvinced of the feasibility of such a tax.
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