France Urged To Pioneer Tobin Tax
Friday, September 16, 2011

According to a recent study conducted by Unitaid, France could introduce a tax on financial transactions unilaterally, without risk to the country’s economy in the short term.

Unitaid’s report highlights that a financial transactions tax could be implemented unilaterally in France (or indeed in any other country), without “significant negative impact for the French financial markets”. It recommends application in France of a tax akin to Stamp Duty in the UK, and advocates its extension to both bonds and derivatives. Unitaid estimates that with low rates, the levy could serve to generate over EUR12bn a year.

During a conference on new sources of financing for development aid, organised by Unesco, United Nations Under-Secretary-General responsible for innovative financing Philippe Douste-Blazy alluded to the report, and underlined that a financial transactions tax is both “technically and economically” feasible.

Providing his backing for the tax, chairman of France’s financial markets regulator AMF, Jean-Pierre Jouyet insisted that the tax is fair, and that it would serve to favour transparency in a sector, which remains “opaque”.

Most notably, Jouyet argued that there would be no danger of the tax harming the financing of the real economy, while warning that the tax should nevertheless be imposed on all transactions. Jouyet also urged the UK and the US to provide their support for the levy, although explained that the levy could just be introduced at euro zone level if this was not possible.

At the conference, the French Minister for Cooperation Henri de Raincourt confirmed France’s determination to play a pioneering role alongside other countries in introducing a tax on financial transactions.

Underscoring French hopes that its presidency of the G20 will serve as a platform to progress the tax, and that the European Union will present a proposal during the forthcoming G20 summit meeting in Cannes in November, the minister noted that the G20 could then take the decision in principle to create the tax. The precise details regarding procedures for collecting the tax and allocation could then subsequently be determined, he added.

The UK, Sweden and the US nevertheless remain categorically opposed to the tax, however.