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Tobin Tax Introduced to Support an Independent United Nations Standing Army
Global governance introduced in
Congress
eco-logic report
The idea of a global tax for the United Nations is seen as
nothing more than "wishful thinking" by Americans who believe
that Congress would never let it happen. Nor would Congress
allow the U.N. to create an independent standing army, say the
disbelievers.
Wake up! It is Congress that can make both happen. Two
Congressmen, elected by the people, have introduced a resolution
calling for the Tobin Tax. This is one of the highest priority
items on the agenda of the U.N. Millennium Assembly, and fully
supported by the NGO Forum.
Two different bills have been introduced which call for a U.N.
standing army. HR 4453, introduced by James McGovern (D-MA),
John Porter (R-IL), and Connie Morella (R-MD); and H.Con.Res.
346, introduced by Albert Wynn (D-MD).
Read it for yourself. Study the proposed bills and Explore the
links at the end of this Resolution and discover just how much
momentum the global tax initiative has generated. Global
taxation and a U.N. standing army will occur unless a new breed
of representatives are sent to Washington.
U.S. Congress Concurrent Resolution on Taxing Cross-border
Currency Transactions to Deter Excessive Speculation
(H.Con.Res.301)
Congressman Peter DeFazio (D-OR) and Senator Paul Wellstone
(D-MN)
(Introduced April 11, 2000)
It is the sense of the Senate and the House of Reprentatives that
the United States should show leadership by enacting, in concert
with the international community, transaction taxes on
short-term, cross-border foreign exchange transactions to deter
speculation.
The adoption of such Tobin-style taxes should be done in
coordination with a large number of nations, in a fully
transparent and accountable manner, with the revenue dedicated to
urgent global needs.
A. Introduction
WHEREAS every day over $1.8 trillion in currency exchanges moves
across national borders, a volume far greater than in the last
decade; and
WHEREAS such rapid movement of foreign currency has created some
additional opportunities for legitimate productive investment,
but also has created the potential of triggering national
currency collapses and resulting financial crises;
WHEREAS daily trading in currency markets increased from $0.2
trillion to over $1.8 trillion in just over a decade, from 1986
to 1998; by comparison, the trade in goods and services for all
countries for an entire year is only $4.3 trillion; and,
therefore, in less than a week, foreign exchange transactions
exceed the entire annual volume of world trade in goods and
services;
WHEREAS over 85 percent of these transactions are of a purely
speculative nature where investors bet on whether currency values
and interest rates will move up or down, and thus bear little or
no relationship to the production and trade in goods or services;
WHEREAS more than 40 percent of all these transactions involve
round trips of fewer than three days; and over 80 percent of
global foreign exchange transactions involve round trips of less
than a week;
WHEREAS the vast majority of transactions take place in
relatively few financial centers, particularly the United Kingdom
(32 percent), the United States (18 percent), Japan (8 percent),
Singapore (7 percent), Germany (5 percent), Switzerland (4
percent), Hong Kong (4 percent), and France (4 percent);
WHEREAS these speculative transactions themselves often cause
short-term fluctuations of exchange rates, thus provoking more
speculation;
II. Sovereignty and Stability of Nations Threatened
WHEREAS such volume and volatility of liberalized capital flows
not only threatens national currency devaluation and financial
crises, but disrupts the ability of nations to establish
equitable and just economic policies; to intervene to protect
their own currencies; and to provide support for needed social
and environmental programs;
WHEREAS in the past, central bank reserves were sufficient to
combat any speculation on their country's currency; now, however,
financial speculators have created a daily market volume which
dwarfs all of the world's central banks combined; and therefore,
when a country cannot defend its currency, it effectively loses
control of its monetary policy;
WHEREAS such speculative pressure on a currency results in higher
interest rates than is warranted by internal monetary conditions;
leading to a lowering of economic growth and an increase in
domestic unemployment with the related social problems;
WHEREAS there is overwhelming evidence that the lack of stability
helps to cause financial crises with increasing frequency
(1992/93 Europe, 1994 Mexico, 1997 Southeast Asia, 1998 Russia,
1999 Brazil), even in countries where basic economic fundamentals
are sound, and the market reacts irrationally to rumors ("herd
behavior"), causing "speculative bubbles" to burst when
speculators flee a particular currency;
WHEREAS such financial crises can have enormous impact worldwide;
for example, the Asian currency crisis lowered the world growth
projection for 1998 by one percent and increased worldwide
unemployment by 10 million; and unpredictable exchange rate
fluctuations create additional uncertainties for entrepreneurs,
making rational planning more difficult;
WHEREAS such crises have not only economic impact, including
exacerbation of global economic inequality; but also social
impact including increased unemployment, price increases and
disruptions, plant closures, poverty, human rights violations,
diversion of resources from sustainable development, and social
upheaval; which burden poor, indigenous, and middle-income
populations most heavily;
WHEREAS such impacts in other nations have a spillover effect in
the United States and elsewhere by contributing to increased
trade imbalances, dumping of low-price products on overburdened
markets, and contributing to increased unemployment, volatility
in agriculture markets, and stagnant or falling wages;
WHEREAS de facto support by governments and international
institutions of excessive financial speculation may undermine
desired macroeconomic policies and contribute to moral hazard and
irresponsible market behavior;
III. Transaction Taxes as a Partial Solution
WHEREAS excessive speculation could be curbed by a very small tax
of between 0.1 percent and 0.25 percent on each cross-border
currency transaction (now commonly called "Tobin-style taxes", as
proposed in 1978 by Nobel prize winning economist James Tobin),
or an alternate two-tiered version (proposed in 1996 by German
economist and IMF consultant Paul Bernd Spahn);
WHEREAS such a tax reduces incentives for short-term speculation
while remaining small enough to leave longer-term investments
intact; with the resulting increased stability of exchange rates
serving as a stimulus for productive trade;
WHEREAS the senior economist of the Federal Reserve Bank of San
Francisco has written, "...if your goal is to limit short-term
speculation, it is hard to beat the Tobin tax";
WHEREAS the revenues from such a tax, projected to be between $50
billion and $300 billion a year, would provide urgently needed
resources to combat global and local crises;
WHEREAS concerns voiced about tax havens and the collection and
enforcement of such taxes have been researched by economists, and
plans proposed to answer these concerns, such as collection at
settlement sites to ensure universality and to track derivative
instruments, as proposed by Schmidt;
WHEREAS there is already an international movement in support of
a transactions tax, including passage of a resolution in the
Canadian Parliament, introduction of resolutions in the European
Parliament, the French Parliament, and British House of Commons,
substantive discussion of the issue in the European Parliament
and the parliaments of Switzerland and Germany, plus a chapter in
the current Finnish government rules;
Now, therefore be it resolved by the U.S. House of
Representatives, that -
(1) It is the Sense of the House that -
(A) The United States should show leadership by enacting, in
concert with the international community, transaction taxes on
short-term, cross-border foreign exchange transactions to deter
speculation. The adoption of such Tobin-style taxes should be
done in coordination with a large number of nations, in a fully
transparent and accountable manner, with the revenue dedicated to
urgent global needs;
(B) The United States should build support for and advocate this
position at the World Bank and the IMF, as well as within other
regional and international organizations, including the OECD, the
G-8, and the newly established G-20;
(C) This should not be done in isolation of other initiatives for
reform of global finance. Instead, the United States should
continue to explore other options together with the international
community.
These options include, but are not limited to:
tougher transparency rules, tighter reserve requirements,
creation of exchange rate "target zones", national currency
controls, cash requirements for mutual funds, and stronger
source-country measures such as disincentives for short-term
lending.
The office of Congressman DeFazio is located at:
2134 Rayburn House Office Building, Washington DC 20515
202.225.6416 ph
202.225.0032 fx E-mail: peter.defazio@mail.house.gov Web:
www.house.gov/defazio/index.htm
The office of Senator Wellstone is located at:
136 Hart Senate Office Building, Washington DC 20510
202.224.5641 ph
202.224.8438 fx E-mail: senator_wellstone@exchange.senate.gov
Web: wellstone.senate.gov
For further information, contact Tom Vinson
tom.vinson@mail.house.gov
Tobin Tax Initiative CEED/IIRP, PO Box 4167 Arcata, CA 95518-4167
phone: (707) 822-8347, fax: (707) 822-4457 e-mail:
cecilr@humboldt1.com
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