Vol. 525 No. 1
14 Mr. M. Higgins asked the Minister for Finance if officials from his Department have been invited to participate in discussions on the international significance of such measure as the Tobin Tax; if he will instruct them to participate in such talks; and the Government's general view on the matter. [22347/00]
I am not aware that any officials in my Department have been invited to participate in discussions on the international significance of the Tobin Tax.
The Tobin Tax seeks to impose a world wide tax on all foreign exchange transactions to reduce exchange rate volatility and to raise revenue to support international development.
The issue was discussed by the Houses of the Oireachtas, Joint Committee on Foreign Affairs, on 12 January last. Officials of my Department attended the meeting. The chairman of the committee 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 are participating in the euro. In the case of this country we also have to be mindful that we have a much higher level of trade and capital flows with currencies outside the euro zone compared to other euro countries. Therefore, the tax is likely to have a disproportionate impact on Irish business and consumers. Were Ireland to take this matter up at EU level it could be perceived as amounting to a proposal for tax harmonisation, albeit in a discrete area. This might have implications for our overall policy position with respect to the role of the EU regarding taxation matters.
While the motives of those seeking to impose such a tax are understandable there is some debate on the theoretical merits of the tax. However, as I have stated in replies to previous parliamentary questions on the matter, leaving aside the issues of theory associated with the proposal – there were still substantial practical difficulties in relation to the tax. These stem largely from enforcement problems. Global co-operation would be required for the tax to become workable. Otherwise, foreign exchange business would gravitate quickly to any country that did not enforce the tax. In this light, the probability of every country in the world applying such a tax, or of one country applying it unilaterally, must be open to question.
