Canada Favours the Tobin Tax

Last March the Canadian House of Commons passed a motion to "encourage the Government to promote a supranational levy on financial speculation in agreement with the international community". This was the first time a National Parliament had reached a decision in favour (although not binding) on an international levy.

The Tobin Tax, which owes its name to the Nobel award winner James Tobin, who proposed it in 1978, is a tax on short-term financial transactions. It would significantly reduce the gain margins of worldwide speculators, who move an estimated $1,400 billion investments daily, without any productive return and cause serious instability to the world’s economy. This tax could technically be applied but would come up against a series of difficulties: (a) like the Carbon Tax, it only works if universally applied (one sole "tax haven" would allow dodging); (b) it is unclear who should manage the revenue and how it should be invested.

The issues which are raised when supranational levies are discussed bring to light the lack of adequate institutions to face the problems of the global economy. In the final count, however, only an international Government, which is responsible to an international Parliament, would have the authority to enforce such a levy and legitimately manage the revenues in homage to the principle of no taxation without representation, which is so dear to liberal democracy.

However, the decision of the Canadian Parliament is important because (a) it is a sign that there is a growing awareness in the world for the need to govern globalisation with supranational tools to stop the wealth of a few prevailing on common good; (b) it is an initial instance of who the federalists’ enemies and allies will be in the battle to build supranational institutions: on one side there are some national governments, organisations of civilised society and a fringe of enlightened financiers, who perceive the inherent threat in international economic anarchy; on the other there are the super-powers, multinational industrial and financial corporations, and those who largely benefit from the absence of a government for globalisation (f.f.).