There are so many talks on UN Millennium Development Goals (MDGs), which is aimed at mitigating poverty in the world. The possibility of “international solidarity taxes” is discussed among governments and civil society as a step to secure the fund needed for achieving the goals. As a part of an international movement which has been calling for the introduction of Currency Transaction Tax (“Tobin Tax”), ATTAC Japan believes that the understanding of the basic problems is needed to formulate the solution. We also believe that international solidarity taxes, including CTT, can only be effective with active participation of social movements and broad layers of citizens in the whole world. MDGs should not be another version of SAPs promoted by IMF/WB and international solidarity taxes should not be a mere complement of ODAs. ATTAC Japan decided to launch a national campaign to broaden the idea of CTT as the most realistic as well as the most creative way of mobilizing people on the most pressing issues of the world including poverty. ATTAC Japan wants social groups in Asia and other regions to join us and form a network to stop financial speculation.

The Reality of Deregulation and Privatization

In the name of deregulation and privatization, everything is being reduced to a commodity. Proponents of deregulation and privatization are saying that the market discipline can bring about abundant life for all people.

But, let’s look at the reality. The pursuit of economic effectiveness resulted in the destruction of employment, the disintegration of sustainable agriculture, the impoverishment of local economy and the loss of natural environment and health. As the deadly derailment on JR’s Fukuchiyama-line April 2005 tragically evidenced, profitability is given higher priority than safety. The same kind of tragedies are happening in the whole world.

Neoliberal globalization, which is solely based on the market discipline, is not bringing about abundant life for all people. On the contrary, it is bringing about a series of harmful effects and increasing poverty. According to the UNDP’s “Human Development Report 1999”, the disparity of income between the one-fifth of the world’s population who live in rich countries and the one-fifth who live in poor countries increased from 30:1 in 1960 to 60:1 in 1990 and to 74:1 in 1997. The HDR report for 2005 indicates that 2.5 billion people or 40 percent of the world’s population live on $2 or less a day. The total income of these 2.5 billion people represents only 5% of the total income of the world.

Speculation on Money

It is known that the international currency transaction and the speculative activity related to it have been contributing to the devastation of national economy of many countries. Since 1980s, the international monetary system, which had been controlled through negotiation between national governments, has been given over to anarchy of free market. International monetary market is heavily influenced by “mega banks” and TNCs which have huge financial resources as well as hedge funds which invest the money trusted by rich people. They buy and sell tremendous amount of financial assets including stocks and bonds across the border everyday in order to increase their assets. They also see the changing exchange rate as another source of profits. They sell and buy huge amount of money every day for the sake of the margin from the varying rate. Thus, the total amount of currency transaction in the world jumped from $18.3 billion in 1977 to $1.88 trillion in 2004 (based on the figure provided by Bank for International Settlements). Most of the transaction is speculative and has nothing to do with the actual business. In other words, gambling dominates the market. Only 5% of the currency transaction is related to the purchase of goods or services and 95% is mere speculation.

The problem is that people of the whole world are affected by the arbitrary changes in the international monetary market due to the speculative demands from a few players. In 1990s, financial crisis hit a series of countries in Asia and Latin America, causing massive unemployment and impoverishment and devastating the society in these countries. Although the majority of the people in the world don’t have any voice in the international monetary market, they are condemned to pay for the game.

Another aspect of the harmful effect of deregulation of financial market is that the major players, “mega banks” and TNCs, can move their money from one country to another without any regulation. As the result, they can avoid tax by shifting the profit to “tax havens”. To compensate for the loss of tax revenue, each national government is reducing the budget for social welfare and increasing tax on people. In this way, people who are not involved in any financial transaction suffer from the collapse of social welfare and the increase of tax burden. In addition, big companies and rich people are pushing for “a small government” and demanding the government to modify the graduated taxation system, decrease the rate of corporate tax, introduce measures for stimulating investment and get rid of any regulation on investment. In short, poor people are paying for the “free business activities” of rich people in various ways. This is the actual picture of current situation of “globalization”.

Currency Transaction Tax Can Help Change the Direction

We want to stop the neoliberal globalization and realize a social/economic system in which the priority is given to the liberation of all the people in the world from poverty and hunger as well as from the effects of the destruction of environment. In many countries especially in Europe, Currency Transaction Tax (Tobin tax) has been advocated as an effective measure to help achieve this goal. CTT is composed of only 0.01% tax on all currency transactions, which can curb speculative activities without any serious effects on international trade. This mechanism can be supplemented by a higher tax rate applied when the change in the exchange rate goes over a certain level. The revenue of this tax can be used for solving problems of poverty and hunger as well as destruction of environment based on a creative initiative of the global civil society.

CTT has three main aims:

(1) To curb foreign exchange markets and thus transnational flows of short-term capital. Thereby the tax will stabilize financial markets and increase the economic policy autonomy of states. This will increase also economic efficiency and well-being.

(2) To create global funds for preventive and compensatory mechanisms, and more generally, for global common goods.

(3) To gain democratic control over global financial markets and the social forces they have helped to unleash and strengthen.

ATTAC Japan supports this idea and has launched a national campaign to broaden this idea in order to push our government to introduce CTT.

CTT is not an unrealistic proposal. Technically it can be easily introduced. It all depends on the willingness of the government. The national legislatures of Canada, France and Belgium have already endorsed the introduction of CTT. In Spain and Italy, the bills to introduce CTT are submitted. Several members of ministries in U.K., Germany, Sweden, Finland and Norway expressed their support for CTT.

Tokyo is the third biggest market for currency transaction after New York and London. Thus, a campaign in Japan for the introduction of CTT is very important.

To realize this idea, we need knowledge of the mechanism of international currency market, tax system and international treaty as well as the experiences and imagination of a range of people. We call on citizens, students, researchers, lawmaker, NGOs and other people to get together and discuss and prepare the introduction of CTT in Japan.

In order to protect the right of the people, which is endangered by the greedy efforts for profits of financial companies, and promote a society in which citizens can actively participate in a democratic way to make decisions on the creation and distribution of wealth, a society which we refer to as “another world”, we call on all the people to join this international initiative.