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Time for a tax on speculative currency transactions – Morgan

25 May, 2010

Reacting today to a new proposal by Internal Markets Commissioner Michel Barnier to put a levy on banks to support the sector in times of weakness, Sinn Féin Spokesperson on Finance Arthur Morgan called for the introduction of an international Tobin tax on speculative currency transactions.

Deputy Morgan said:

“It is important to remember that market bubbles and crashes are not the result of the uncoordinated interactions of individuals, but of strategic actions by speculators, bankers, brokers, media and regulators, facilitated by Government policies.

“The banks lament at the prospect of a levy or a tax on speculative financial transactions and threaten that their lending capacities would be diminished, but after decades of risky, irresponsible practices they sought to be bailed out by taxpayers. This cannot continue. The case for this levy or transaction tax has never been more wanting as taxpayers are forced to cover the losses of the banking sector.

“Until now the banking sector was characterised by higher leverage in good times and much lower in bad times, adding to distress at just the wrong moment. An insurance fund for the financial sector should be developed to cover events in the future, instead of turning on taxpayers. We have a protocol for such funds when there are natural disasters and given the crippling ramifications of financial crises, there should be one for the banking sector.

“Now is the time to introduce a Tobin tax, an international tax on speculative currency transactions which would discourage short-term speculation so that all activity going on in the financial sector would be diminished relative to productive investment only.” ENDS

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