Currency exchange tax plan for aid

from Channel 4

MPs have called for a new stamp duty to be imposed on currency transactions to raise money to help reduce global poverty.

The All Party Parliamentary Group for Debt, Aid and Trade said a stamp duty of 0.005% on all sterling foreign exchange transactions carried out by banks and large companies would raise £2.4 billion a year towards international development funding.

It said this would be enough to fund basic healthcare in Ethiopia, Uganda and Tanzania for an entire year.

It added that the stamp duty would have little impact on the City as it would be charged at only 0.005%.

The group, which looked at a number of different financial streams to raise money, said the proposal for a sterling stamp duty was "well researched, technically sound and (with) the potential to raise considerable funds".

Ann McKechin, chair of the group, said: "To be effective, a sterling stamp duty would have to be easily and inexpensively implemented, capture the vast majority of sterling transactions around the world, and be set at a level that would not lead to avoidance or cause any adverse effect to UK trade or the City of London.

"On the balance of the evidence provided to this inquiry, we believe that it passes these tests and should be actively considered by the UK Government."

The stamp duty would apply to all sterling foreign exchange transactions worldwide, and as transactions are now electronic, it would be easy to monitor and collect. The group said foreign exchange groups would be able to absorb or pass on the duty, adding it to existing transaction costs.

Foreign exchange brokerage company INTL Global Currencies ran a week-long pilot of sterling stamp duty during May.

Philip Smith, director of INTL Global Currencies, said: "With minimal impact on our profits, we were able to make a beneficial contribution to the lives of people in a poorer country."