[PEN-L:28324] Brown dismisses Tobin tax

[Chris Burford <cburford@xxxxxxxxxx>]

Brown dismisses Tobin tax plan

Heather Stewart Tuesday July 23, 2002 The Guardian

Chancellor Gordon Brown cold-shouldered anti-globalisation protesters last
night as he rejected calls to penalise currency speculators to raise cash
for developing countries.

Appearing before the House of Lords economic affairs committee, Mr Brown
said this so-called Tobin tax on foreign-exchange transactions had "big
problems attached to it".

Increasing the flow of aid to developing countries "came down to whether
there is political will on the part of governments to contribute more to
international aid", not to levying new taxes.

The Chancellor's chief economic adviser, Ed Balls, added that the Treasury
was "very unpersuaded" that a Tobin tax would help to limit the kind of
damaging currency speculation that fuels financial crises.

"It's not at all clear the Tobin tax is stabilising; in fact, it could well
be destabilising," he said. "Well-designed, short-term capital controls
could actually be more effective."

Mr Brown's objections will disappoint campaigners, who had hoped support
was building for the Tobin tax, after the European Commission announced it
was examining the issue last September.

Yesterday's hearing was part of a long-running inquiry into globalisation,
and Mr Brown used it as an opportunity to reinforce his view that much more
needs to be spent on ensuring all countries reap the benefits of wider
global trade.

"If countries are to be asked to pursue more stable policies, we must be
prepared to do more on development aid," he said, suggesting western
governments might need to double their contributions.

He also criticised US moves to introduce tariffs on steel imports, and
support farmers with a multi-billion dollar subsidy package.

"Bringing agricultural protectionism to an end is one of the great issues
of our time," he said, insisting that the EU will have to reform the Common
Agricultural Policy, its own system of farming subsidies.