Europe's Tobin Tax distraction
Barry Eichengreen.
Project Sindicate
CAPE TOWN – At last, European
leaders have revealed their top-secret plan for solving the euro’s
crisis. And it is – drum roll – a version of the “Tobin tax,” a levy on
financial transactions first suggested in 1972 by the Nobel laureate
economist James Tobin.
Now,
40 years later, the European Commission has proposed – and French
President Nicolas Sarkozy and German Chancellor Angela Merkel have
endorsed – a turnover tax on all financial transactions, varying from
0.1% on stocks to 0.01% on financial derivatives like futures and
credit-default swaps. If the tax can’t be imposed globally or even
Europe-wide, France and Germany will go it alone. Given Sarkozy’s
enthusiasm for the tax, there is even talk of France adopting it
unilaterally.
