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A proposal for predictable income: the currency transaction tax – the elephant in the room. Action for Global Health conference February 2009. What is ‘Innovative’ Finance?. Principles: sufficiency; predictability; additionality; verifiability; ease of implementation

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a proposal for predictable income the currency transaction tax the elephant in the room
A proposal for predictable income: the currency transaction tax –the elephant in the room

Action for Global Health conference

February 2009

what is innovative finance
What is ‘Innovative’ Finance?
  • Principles: sufficiency; predictability; additionality; verifiability; ease of implementation
  • Reliable, long-term, determined by need
  • Raised creatively, spent strategically:

UNITAID

  • If ‘Innovative’ finance isn’t ‘additional’

then what is its value?

types of financing instruments
Types of Financing Instruments

Voluntary: lotteries, opt-in/opt-out schemes

Borrowing: Specialised bonds  IFFIm

Market mechanisms: auctioning of international

carbon emission permits (Climate Change  Copenhagen)

Taxation:

  • Aviation/Maritime levies  UNITAID
  • Levies on Financial Transactions:

General/stocks/bonds/ currency

volume potential
Volume/Potential
  • Financial transaction taxes for years on instruments including bonds and stocks - applied in many countries: UK, USA, China, India, Colombia
  • Currency: $500 tr. 2004 - $1.9 tr. per day

$800 tr. 2007 - $3.2 tr. per day

< $1,000 tr. 2008 - $4 tr. per day

why it is feasible
Why it is feasible?
  • Computerised collection – electronic/automated
  • Rate: 0.005% - 0.01%
  • Revenue: UN University – $33 - $60 billion per annum
  • UNITAID – important precedent
  • Do you think it’s true that a country that wanted to implement a currency transaction tax on its own currency couldn’t do it?
with financial crisis good bad timing
With financial crisis - good/bad timing?
  • Press: bail out banks; war-chest for IMF; augment EU budget
  • Historical obstacles from the banking world are less present now as governments are in control of many of their institutions
  • A CTT would mitigate against the most speculative of currency trades helping to make the market more stable
  • At the low rate proposed it would not constitute an undue burden on the banking system
  • Can the world afford especially in these financially difficult times to leave this vast revenue stream untapped?
responding to health sector needs
Responding to Health Sector needs
  • Predictability – even in adverse times the foreign exchange market is still growing
  • Providing a long-term structural difference: Health system strengthening; clean water; the major diseases
  • The elephant in the room
conclusions
Conclusions
  • No monopoly on this idea
  • Unique window re all things ‘banking’
  • The Leading Group – Paris, Spring 2009
  • Commitment of govts. & civil society to build on UNITAID success to multiply efforts to make the CTT happen in the coming year!