by Marie Moran / Attac Ireland
originally published in LookLeft vol.2, issue 19, The Rising Tide, September 2014
‘Close down the Casino Economy! Disarm the markets!’ These have been the two main slogans of the global organisation ATTAC since its founding in 1998. It is best known for its campaign for a financial transaction tax, for which its name is an acronym.
The arguments for a financial transaction tax (FTT) are well-rehearsed, and are far better known today than they were when ATTAC launched. They remain compelling. Firstly, even a modest FTT of 0.05% on all international financial transactions would raise significant resources to meet social needs and reduce global inequality. Secondly, it would discourage market speculation and high frequency trading, and reduce market volatility. Thirdly, it would create a modicum of financial justice – the global financial sector is 26 times more profitable than the real economy, but is subject to hardly any taxes at all. These arguments have been developed in much greater detail and complexity, but the basic premises remain the same – and it is these that matter from a societal and campaigning perspective. A recent reliable report can be found here.
In the wake of the financial crisis, the case for a FTT hardly needs pressing. Today, 64% of EU citizens support the implementation of the tax, while 220 million people back it worldwide. It also has the support of the UN, the G20, and the IMF, and is already in place in over 30 countries worldwide. And now, 11 EU countries have signed an agreement to introduce an FTT, and will implement a 0.1% tax on bonds and shares, and a 0.01% tax on derivatives by January 2016. Regrettably, though not unexpectedly, Ireland is not one of these countries.
Even setting aside Ireland’s non-participation, all is not well with the proposed EU FTT. The resources raised are intended to be used primarily to cover the costs of the banking crisis, rather than to finance global common goods and tackle global inequality. ATTAC has demanded that the EU implement other anti-austerity measures to deal with fiscal deficits, especially where these are the result of the socialisation of financial sector losses. In addition, several features will reduce its effectiveness – notably, the very low tax rate proposed for derivatives and the exclusion of currency transactions from taxable trades mean that the currency and futures markets will remain dangerously speculative and volatile. ATTAC calls for these shortcomings to be addressed in upcoming negotiations.
Meanwhile, the justice-based rationales for an FTT are attacked by the financial sector and corporate, political and media elites, with predictable warnings of reduced economic growth, higher unemployment, increased capital costs, and a loss of ‘efficiency’ in market allocations. These complaints conveniently ignore the fact that 80% of financial transactions are essentially speculative or very short term, and not linked to the real economy. These and many more myths have been effectively debunked by economic experts , and even by financial ‘insiders’ critical of high-frequency trading.
The unhappy compromise is the relatively weak proposal currently under consideration. Even this, however, would raise up to 35 billion euro per year in revenue for the participating states, and, according to Claiming our Future, up to 500 million for Ireland if it participated. The stronger version advocated by ATTAC would raise considerably more. Yet in both versions, it would put some manners on the financial markets.
Perhaps then, the main victory of a FTT would be symbolic – this, too, has always been a key ambition of the ATTAC campaign. . Even stronger versions would take only a drop from the trillion dollar ocean of derivatives, debt and finance. It would do little to remedy the vast social inequalities that characterise both relatively rich European States, and the world more generally. Furthermore, while welcome, financial justice requires far more than an FTT. ATTAC argues that we need wealth taxes, robust corporate taxation, the closure of tax havens, a limit on the money creation capacity of financial institutions and greatly enhanced democratic mechanisms for international financial decision-making. Many would say that even these are insufficient, and that what is required is a complete restructuring of international finance and ultimately the replacement of capitalism itself with a more humane, democratic and sustainable economic system. But in a world where finance still reigns supreme, where human needs are subjugated to market demands, and where 3000 people turned up in Dublin last week to see the ‘Wolf of Wall Street’ extol the values of greed, maybe a small symbolic victory is as good a place as any to start.