Michael Gurstein on Fri, 26 Mar 1999 00:05:58 +0100 (CET)

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<nettime> Canadian Press newswire story on Tobin Tax (fwd)

From: Canadian Press Business Newswire, March 24, 1999

MPs from all parties support tax on speculation


OTTAWA (CP) - MPs from all parties - including Finance Minister Paul Martin
- have supported introduction of a new tax on all transactions in
international financial markets. 

But the various supporters of a motion urging the so-called Tobin tax have
different reasons for voting the way they did. 

And nobody expects the international community to support such a tax soon. 

The small tax, first advocated by American Nobel-winning economist, James
Tobin, would be applied to every international financial market transaction
to slow down such things as currency speculation and capital flight from
weak economies. 

Another application touted for the tax would be to raise money for
international projects such as environmental cleanup or Third World

The Commons voted Tuesday 164-83 in a support of a motion by New Democrat
Lorne Nystrom that Ottawa should enact the Tobin tax in concert with the
international community. 

Nystrom told a news conference Wednesday that the next step is for the
finance minister to get the tax on the agenda at international forums like
the G-7. 

He also credited Martin, whom he met before the vote, with being critical
to the success of the resolution. 

"What we have done in Canada will be extremely helpful in terms of people
around the world in persuading their national parliaments in adopting the
Tobin tax," he said. 

"I believe if Mr. Martin didnít want this to happen he would have made sure
that it would not happen." 

Nystrom added that with the influence of nation states declining in a
globalized world, some sort of mechanism is needed to raise money for
international projects. 

Based on financial market activity in 1995, a Tobin tax of 0.1 per cent on
trading transactions would have raised $175 billion US. 

Martin, who first raised the Tobin tax at the G7 in 1995, said he agrees
that the tax would be a good international fundraiser and for that reason
should be discussed. 

"It would enable many . . . countries such as Canada to actually lower
taxes if in fact a large vehicle for large international requirements were
found," he said. 

But he said such a tax would be a poor way to control the flow of hot money
because if the tax were as small as many people say it would be it would
not be effective in discouraging speculation. 

And if it were large enough to discourage speculation it likely would have
counter-productive side effects, Martin added. 

Still, speculation control was exactly the reason Reform MP Keith Martin
supported the resolution. 

He added that the wide support among MPs could be interpreted as a vote of
non-confidence in the international financial system after last yearís
Asian and commodity crises. 

"I compliment Mr. Nystrom and the NDP for putting it forward," the Reform
MP said. 

"I think it will start an extremely important debate that no one is putting

That support was not shared by Monte Solberg, Reform finance critic, who
said the tax would act to shelter weak economies. 

Liberal backbencher John Bryden was also opposed. He called the resolution
just as dreamy as the motion passed in the Commons by all parties in 1989
to ban child poverty by the year 2000. 

The Tobin tax has been opposed by the United States, Germany and Britain as
well as most of the international financial community, which hates the idea. 

All agree that to be effective the tax would have to be jointly implemented
by all major industrialized countries and, as the finance minister noted,
that unanimity simply isnít available. 

© The Canadian Press, 1999
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