Fabius dismisses 'unworkable' tax supported by Jospin

Less than three days after French prime minister Mr Lionel Jospin came out in support of an international levy on financial transactions, his finance minister Mr Laurent Fabius has said the so-called Tobin tax is unworkable.

Writing yesterday in the French financial daily Les Echos, Mr Fabius said while the principles underlying the tax were just, practical considerations meant it was unlikely ever to be put into effect.

And he repeated his view that a more feasible way of raising international funds to pump into development in poorer nations was via a tax on the export of arms.

The Tobin tax - named after James Tobin, professor of economics at Yale University - would take up to 1 per cent from all currency trades, and has been adopted as a rallying-cry by the anti-capitalist movement.

In a televised interview this week, Mr Jospin said he had long backed the idea, and now was "in favour of France proposing that the EU take an initiative at the international level," to have the levy adopted.

But, said Mr Fabius, who ordered a feasibility study when he took over at the finance ministry, a tax pitched too low would fail to prevent destabilising shifts of currency, while one pitched too high would hamper transfers essential for international trade. Anti-globalisers have accused Mr Jospin of expressing support for the tax in a cynical appeal for left-wing votes eight months ahead of France's presidential elections.