Brian O'Shea
Question:147 Mr. O’Shea asked the Minister for Finance the proposals he has to introduce the Tobin tax (details supplied); and if he will make a statement on the matter. [13331/04]
View answerTuesday, 11 May 2004
Questions (117)
Written answers
The issue of the Tobin tax has been considered at a number of fora, including the informal ECOFIN meeting at Liège on 22 September 2001. The then Belgian Presidency of the EU 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. It was not clear that a further examination of the issue by the Commission would ensure satisfactory answers to the questions concerning the tax. These include 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 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 this study would examine the arguments for and against the Tobin tax. The study, Responses to the Challenges of Globalisation, published on 14 February 2002 concluded that "while as a source of additional revenue a currency transaction tax may look appealing, its feasibility is, however, not demonstrated". There have been no further developments at EU level with regard to the possible introduction of the Tobin tax. I do not propose to introduce such a tax as I remain unconvinced of its feasibility.