Sir, - As Paul Gillespie's World View ("Idea of transitional tax on currency speculators taking off, The Irish Times, 24th June) highlights, there is an urgent need for international financial institutions to revisit the idea of a tax on currency speculators, commonly known as the Tobin Tax. The UN Development Programme, in its 1999 Human Development Report, proposes several possibilities of generating additional resources to be invested in poor countries, including implementation of the Tobin tax proposal.
The 1990s will be recalled for the series of currency crises which occurred in the EU in 1992-3, Mexico 1994-5, Thailand, Indonesia, South Korea and Malaysia in 1997, Russia 1998 and Brazil 1999. The fallout in human suffering from these crises was huge, with the World Bank estimating that for the four south-east Asian countries mentioned above there was a drop of about 10 per cent in economic activity and a doubling to 90 million of the numbers of people living in poverty.
Yet in December 1999 Wall Street banks, which make huge profits from currency speculation, set aside $13 billion for year-end bonuses. Meanwhile 1.3 billion people live on less than a dollar a day. In other words these Wall Street dealers on their bonus day receive more than 10 times the collective daily income of the poorest fifth of humanity.
The Tobin proposal has also merit as an efficient means of curbing financial crises. As such a tax could be nationally administered using electronic communications it would allow for continuous monitoring of foreign exchange movements. Thus it could provide more effective early warning of crises due to currency movements.
Mr Gillespie notes that most IMF and WTO representatives oppose such a tax. However, it is the responsibility of international financial organisations, which were set up to serve people's economic well-being, to explore all means of curbing excessive financial speculation as financial crises have become a major form of human disaster.
The governments which make up these international institutions, including our own, should review the evidence on the impact of deregulation and financial globalisation on poverty and inequality, and commission new research as required. Unfortunately, although the case for this tax is gathering momentum, and governments such as those of Canada and France are promoting the idea, Charlie McCreevy is opposed to it. He should reconsider this position. After all, in a world where global aid flows have fallen for most of the 1990s and the numbers living in poverty have risen, we need all the tools we can gather to mobilise resources and to ensure a fairer distribution of income in our increasingly globalised economy.
Moreover, unlike the rest of us, why should a tiny number of people be allowed to earn billions free of tax because their activities take place beyond national borders? It's time to inject some equity into the international financial system. - Yours, etc.,
Justin Kilcullen, Director, Trocaire, Booterstown Avenue, Blackrock, Co Dublin.