MONEY MATTERS

An international group of finance experts have criticised plans for bank taxes put forward by governments and the IMF in favour of reviving the idea of a “Tobin tax” on foreign exchange trades. The global tax could raise $33 billion to fund development projects and bring nations together in a single effort to combat poverty rather than create divisions through competing bank taxes. A tax on foreign exchange deals would cost an extra 0.005% on each trade and would best meet the criteria as the most appropriate source of revenue to fund public goods and share of wealth generated by globalised companies.

Critics of the G20 summit expect rich nations to reject a global tax in favour of individual nations adopting their own schemes. The U.K. government has agreed to apply a tax on bank profits and is considering a tax on bonuses if it reaches international agreement. The U.S. government has also come under acute pressure from Wall Street institutions to block further tax raising measures, including a levy on foreign currency trades. Under the latest proposals, the tax would be applied to deals in the four main currencies – the dollar, yen, euro and sterling – that are traded in foreign exchange markets. If the U.S. government opted out of the scheme the majority of tax revenue would be lost.

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