A 0.005% duty on sterling could raise more than $2 billion a year for international development
- We need more money for AIDS
- We need to find it fast
- It should be predictable and sustainable over the long term
Well here’s one we prepared earlier…
A stamp duty on currency transactions
A ‘stamp duty’ on the international currency trade — the richest market in the world — could help plug this funding gap, could be implemented quickly and would provide predictable funding over the long term.
Campaign progress
A practical demonstration
In May 2007 a INTL Global Currencies a foreign exchange company in the City of London, agreed to run a week-long pilot of the scheme. It encountered no technical problems and demonstrated that the UK could apply such a charge on all sterling transactions regardless of where in the world the sterling transaction takes place. The Guardian reported Philip Smith, director at INTL, as saying “With minimal impact on our profits we are able to make a beneficial contribution to the lives of people in a poorer country - the more business we do, the more benefit to the developing world. If we can act as the first rung on the ladder towards this new way of raising aid revenue through currency transactions, we’ll be a very proud company.”
Parliamentary approval
In 2007 the All-Party Parliamentary Group (APPG) for Debt, Trade and Aid, one of the largest and most active groups in parliament with nearly 200 members, led an enquiry into the need for and feasibility of a foreign exchange charge. The parliamentary investigation took evidence from a range of governments, NGOs, financial actors such as the commercial banking industry and World Bank, and academics including Nobel prize winning economist Joseph Stiglitz.
The report, available on the APPG’s website concluded that the proposal was “technically sound”, “entirely feasible”, “relatively simple to implement”, with “the potential to raise considerable funds in addition to the UK’s ODA commitments almost immediately.”. It added “Furthermore, owing to the UK’s established leadership role in this field, there is a real possibility of encouraging like-minded nations to follow suit, increasing dramatically the potential revenue that could be generated.”
A stamp duty on currency transactions is a small charge on currency trading. It could be implemented by any one country for its own currency. A very small stamp duty (of 0.005%) on sterling transactions alone would generate up to US$2 billion each year.
The majority of currency transactions are undertaken by 30 massive finance houses. The five wealthiest of these made $74 billion in pre-tax profits in the financial year 2003-04.
- Recent research shows there are no technical barriers to implementing such a duty. The infrastructure required is already in place and the charge could not be avoided.
- Such a tiny duty would not damage trade, interfere with the market or cause a loss of business.
- The duty would be easy to implement — Parliament could enact it in a year.
The UK could choose to implement a stamp duty on currency transactions now, and generate more than two billion pounds of additional revenue for development. Such a move is technically feasible, cost-effective, and relatively straightforward. All that is missing is the political will.
A currency transaction tax levied on the four major world currencies — Dollar, Euro, Yen and Sterling — could yield revenue of more than $33 billion (£16 billion) annually.
“Traditional increases in donor aid budgets will not be enough to provide these additional resources and meet the aid targets that have been set. Innovative financing mechanisms are needed to help deliver and bring forward the financing urgently needed to achieve the Millennium Development Goals.” UK Treasury
New campaign film for 2008
Can pay, Should pay Jon Snow introduces a vision for the end of poverty…
This film is a powerful introduction to the stamp duty, and a persuasive call to support its implementation. Watch the full film on the Stamp Out Poverty website, or see it in two parts below.
Can pay, should pay: Part 1
Can pay, should pay: Part 2
Contact us if you would like a hard copy of the film or a speaker for a campaign event.
A stamp duty as low as 0.005% on sterling could raise over £2 billion for international development
Bulb
A Sterling Solution, Implementing a stamp duty on sterling to finance international development, Stamp Out Poverty, September 2006
Taking the Next Step, Implementing a Currency Transaction Development Levy, Stamp Out Poverty, February 2007.
Meeting the Millennium Promise, Executive summary, All Party Parliamentary Group for Debt, Aid and Trade.
Meeting the Millennium Promise, Full Report, All Party Parliamentary Group for Debt, Aid and Trade, November 2007.
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