Geography Reference
In-Depth Information
final chapter. This involves the idea of establishing a global tax on all
currency transactions, as was first advocated in 1972 by James Tobin,
an American economist. It is estimated that trillions of United States
dollars are traded daily on foreign exchange markets around the world,
although it is thought that only some 5 to 10 per cent of this is neces-
sary to finance trade. The rest amounts to financial speculation in order
to make profits. James Tobin suggested that all such transactions
should be subject to taxation of between 0.1 and 0.25 per cent. Although
this is a small proportion, it is estimated that such a tax would generate
around US$250 billion per annum for development purposes, in par-
ticular the alleviation of poverty and inequality. This figure represents
over five times the total amount that is presently given in the form of
aid around the world. It is argued that such a form of taxation would
also serve to reduce the volatility that is characteristic of the interna-
tional financial market.
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