Dáil Éireann Debate, Tuesday - 29 June 2004
146 Mr. R. Bruton asked the Minister for Finance the assessment that was undertaken within his Department of the proposal for a Tobin tax; if it was submitted to an international agency for consideration; the countries that have offered to support it; and the position that Ireland has adopted. [19615/04]
View answerThe Tobin tax was 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 Commission on the issue of globalisation. Most Finance Ministers, myself included, continue to have reservations about the proposal. We 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 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.
At a formal ECOFIN meeting on 16 October 2001 it was agreed that the Commission would carry out a study on globalisation and examine the arguments for and against a Tobin tax. On 14 February 2002 a study, entitled Responses to the Challenges of Globalisation, was published. It concluded that the Tobin tax, "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 on the possible introduction of the Tobin tax. The European Commission has not presented a formal proposal on the topic. I am not aware of any specific developments by an international agency nor am I in a position to comment on the current policy position of other governments.
Apart from consideration in an EU context, the issue was discussed by the Oireachtas Joint Committee on Foreign Affairs on 12 January 2000. Officials from my Department attended the meeting. Its chairman acknowledged that Ireland could not act unilaterally in the matter. He also pointed to the practical difficulties that would be caused at EU level by such a tax given that not all EU members participate in the euro. Ireland must be mindful that we have a much higher level of trade and capital flows with currencies outside the eurozone compared to other euro countries. Therefore, the tax would be likely to have a disproportionate impact on Irish business and consumers. As indicated in replies to previous questions, I do not propose to introduce such a tax as I remain unconvinced of its feasibility.
