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The first idea that it could be useful came from the economist James Tobin. The tax is meant to put a penalty on short-term speculation in currencies. The proposed tax rate would be low, between 0.1% to 0.25%.
On August 15, 1971, Richard Nixon told that it would no longer be possible to change the US dollar to gold, so ended the Bretton Woods system. Tobin suggested a new system for international currency stability, and proposed that such a system include a charge on foreign-exchange transactions. Professor Tobin later received a Nobel Prize in Economics in 1981.
The idea was nearly forgotten for more than 20 years. In 1997 Ignacio Ramonet, editor of Le Monde Diplomatique, started the debate around the Tobin tax again with an editorial titled "Disarming the markets". Ramonet proposed to create an association for the introduction of this tax, which was named ATTAC (Association for the Taxation of financial Transactions for the Aid of Citizens). The tax has then become an issue of the antiglobalization movement and a matter of discussion not only behind academic institutions but even in the streets and in parliaments around the world, such as the UK and France.
Tobin tax projects in the world
Since one country acting alone would find it very difficult to introduce this tax, many argue it would be best done by an international institution. It has been proposed that having the United Nations manage a Tobin tax would solve this problem and would give the U.N. a large source of funding independent from donations by participating states. However, there have been initiatives of national dimension about the tax.
The Tobin tax idea was the subject of much discussion in Europe in the summer of 2001. On June 15, 2004, the Commission of Finance and Budget in the Belgian Federal Parliament approved a bill implementing the Spahn tax (a version of the Tobin tax proposed by Paul-Bernd Spahn). According to the legislation, Belgium will introduce the Tobin tax once all countries of the eurozone introduce a similar law.
- Disarming the markets, editorial by Ignacio Ramonet, Le Monde Diplomatique 1997
- Tobin Tax Initiative
- War on Want
- coverage of the issue in HedgeWorld
- The Guardian editorializes against the Tobin tax
- Currency Transaction Taxes - analysis from Global Policy Forum
- English version of James Tobin interview on Der Spiegel on Jubilee 2000 web site
- ATTAC France's view on Tobin's interview (English version)
- Website offering coverage of Tobin tax initiatives, as well as supportive and critical papers
- JEEA article by Prof. Hau