Thursday, September 23, 2010

A pro viewpoint on the international financial tax

The United Nations summit on the Millennium Development Goals did have one concrete policy mentioned. French President Nicolas Sarkozy brought up the tax on international financial transactions. This new tax would be on the currency transactions that are made to make money off of rising of falling currency prices.

AIDS activist Matthew Kavanagh offers a pro-viewpoint of this new tax in a piece for the Huffington Post. Kavanagh says the tax will help to bring some regulation this form of trading, and bring a lot of help to those in poverty.

When President Barack Obama was running for his office he pledged $50 billion over 5 years to the Global Fund and an increase of at least $1 billion per year to the U.S.-bilateral PEPFAR program. But instead the White House has requested essentially flat funding and a $50 million decrease this year to the U.S. contribution to the Global Fund.

AIDS activists have been heartbroken watching as momentum in the fight against AIDS begins to falter. The disconnect between science and policy is drastic: reaching all those in need of antiretroviral treatment could drastically slash infection rates and save millions of lives. One study shows as much as 92% reduction when the HIV+ member of a couple is on AIDS treatment! The newest models show that if we invest now we can halt the pandemic in its tracks--we can end HIV for the next generation. Or we can flat-line and the devastation returns.

I am told by people within the Obama administration that they are thinking about making the first ever multi-year pledge to the Global Fund from the U.S. My question is whether this will turn out to be a cynical "as little as we can get away with" moment or a transformation in U.S. policy. A small increase would be a catastrophe because pandemics don't wait around for small progress but need serious commitment and leadership--which will pay off. But if the U.S. pledged more like $5-$6 billion over the coming three years it could transform the debate. It would pressure other donors to do more and the Global Fund could have what it needs to craft a bold, winning strategy.

This week the French and Spanish presidents both came out strongly for a tiny tax on financial speculation that could raise hundreds of billions of dollars each year. Congressman Pete Stark has put forward a bill in the U.S. congress to do just that--a 0.005% tax on currency speculation by the big banks.

The currency markets have reached $4 trillion per day. Yes, that's trillion with a "T," worth of just trading money back and forth between currencies in a gamble to try to make fast cash off changing exchange rates. We're not talking about you or I traveling and needing to change cash or migrant families sending home needed money--for that we already pay huge percentages to the banks. But the speculators--those with millions to just move around from account to account--they do so without being taxed at even a miniscule rate.

At the U.N. this week all we heard from wealthy-country officials was what difficult budget times we were living in and how we should stop bothering them about financing. Well at least President Sarkozy is paying a bit of attention. He's noticed that the mammoth, untaxed financial sector isn't doing its part. And he's figured out that all the arguments against this idea don't hold water--it's doable, and it would raise billions each year.

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