TOWARDS AN ALTERNATIVE/247that every day more than 90 per cent of international financial trans
actions are purely speculative (and therefore non-productive)
operations. According to the Bank of International Settlements (BIS),
in 1995 these transactions totalled SI,400 billion every day. It is
calculated that a 0.5 per cent tax on such transactions would bring in
SI,800 billion in its first year. This measure of basic social justice
would have such a dissuasive effect on speculation that the windfall
would drop off dramatically after the first year. But the exercise reveals
that it is indeed possible to acquire badly needed funds. Such a measure
would also shore up the autonomy of national monetary policies.
Tobin calls for a proportional tax, imposed on all international
currency transactions. The tax would apply at both the time of sale
and the time of purchase, whatever the purpose of the operation
(commercial or financial). Initially, the tax was meant only for up
front transactions. However, since there would be too many ways to
get round such a tax, it is clear that the tax would also have to apply
to other types of transactions - whether up-front, futures, options,
currency swaps or other types of exchange transactions.
The tax would be levied at one rate the world over, to avoid the
transfer of speculative activities to competing marketplaces and
countries. The different national governments would collect the tax
for all operations carried out within their territory, whatever the
currency used.
The tax would curb speculation because the total tax collected is
inversely proportional to the length of time the asset is held. The
shorter an investor's position, the more quickly the total tax collected
increases automatically. For example, a 0.5 per cent tax levied on a
two-day-long operation produces the equivalent of a 517 per cent
annual tax. For a seven-day-long operation, an annual equivalent of
68 per cent. For a month-long operation, 13 per cent. Three months,
four per cent. Three years, 0.3 per cent. Ipso facto, a surtax on purely
speculative transactions.
OTHER PRIORITIES AND SUBJECTS FOR DEBATE
The Ecological Dimension
Criticisms of World Bank and IMF activities have highlighted the
ecological disasters these institutions have helped unleash on both a
local and global level. Any serious alternative must keep in mind the
environmental dimension. We are told that the only kind of growth