C/wealth leaders urged to support currency transaction levy for health

Nov 27, 2009 News

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By Gary Eleazar
in Trinidad

A small consortium of international bodies yesterday appealed to the Commonwealth Heads of Government to place on their communiqué that will be issued at the end of CHOGM 2009, their support for Financial Transaction taxes, including a currency levy for health.
While the proposed tax is 0.005 per cent of the transaction, the speakers insisted that given the volume of currency traded daily, when one assesses the bigger picture, it amounts to a significant amount of money to be available to help in the fight against HIV/AIDS among other ailments and requirements, even possibly climate change.
Director of the international body ‘Stamp Out Poverty’ David Hillman in his presentation yesterday, a day before the official opening of CHOGM, told media operatives that the initiative has the backing of the British Prime Minister Gordon Brown.
He noted that in the past while banks and traders were able to make hoards, seemingly without ablation, the financial crisis that hit the world has changed the modus operandi with respect to how business is to be conducted.
He added that there is now the idea that banks need to bail themselves out and this form of taxation is the way in which it is to be done.
Hillman said that the body wanted to see the Commonwealth travel along the same path and follow the lead by placing the issue on the forthcoming communiqué.
Basil Williams, Director of the HIV/AIDS Alliance Caribbean, in his plea to Commonwealth leaders, pointed to the fact that funding for the fight against HIV/AIDS is quickly dwindling and traditional donors are finding it harder and harder to sustain such funding, choosing in recent times to fund projects related to economic development.
This, he said, is a trend that is being noticed particularly in the Caribbean, and in 2010, there is a significant shortfall projected for the assistance that will be received for addressing issues surrounding HIV/AIDS.
He noted that what is need are sustained programs, pointing out that in the past there were several lofty projects launched and in the end the focus is taken away from actually implementing the programs successfully. Rather, the focus is on securing funds which takes away from the effectiveness.
According to Williams, there needs to be a commitment from the Commonwealth leaders on a way forward in ensuring sustainable programs, pointing to the tax as a viable opportunity that must be acted on with haste.
Dr John Foster, a Research Associate from Canada, attached to the North South Program, in his presentation said that there have been several feasibility studies conducted, and it is a mechanism that could work.
He noted that the proposed tax was miniscule and given the subject of the tax, despite its minutia, it will accumulate to a significant amount of revenue which is not impossible or complicated to implement and maintain.
The grouping called on the Commonwealth leaders to develop the contract between respective banks and their society.
It was pointed out that a Currency Transaction Levy is essentially a tax on wholesale or interbank foreign exchange transactions.
Foster added that levies on numerous types of financial transactions, such as taxes on share and bond trading or bank debits, have a long history. However, the foreign exchange market is an anomaly insofar as it remains untaxed.
In 2007, an estimated US$3.2 trillion of foreign exchange transactions occurred every day.
Over the course of the year, this equated to approximately US$800 trillion. As such, the proposed Currency Transaction Levy rate of 0.005 per cent would collect a relatively small amount from the substantial volume traded to be used to specifically improve access to health services in developing countries.
Citing an example, Foster calculated that a 0.005 per cent Levy applied solely to the pound Sterling, would generate US$4.98B annually.
In pointing out the grave necessity for the implementation of the proposal, HIV/AIDS Alliance Caribbean’s Basil Williams, explained that the health Millennium Development Goals are “perilously” off track worldwide, including in a number of Commonwealth countries.
“Progress is particularly limited in meeting the commitment to halt by 2015 and to begin to reverse the spread of HIV and AIDS, as well as the commitment to achieve, by 2010, universal access to treatment for HIV and AIDS for all those who need it.”
Dr Foster emphasised that should the tax be introduced then the cost of production of the medicines used to treat the illness could soon be reduced and the people that need the treatment would be able to do so given that it would be relatively cheap.

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