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 implementationPrinciples: sufficiency; predictability; additionality; verifiability; ease of implementation Reliable, long-term, determined by needReliable, long-term, determined by need Raised creatively, spent strategically:Raised creatively, spent strategically:UNITAID If ‘Innovative’ finance isn’t ‘additional’If ‘Innovative’ finance isn’t ‘additional’ then what is its value?

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  UNITAIDAviation/Maritime levies  UNITAID Levies on Financial Transactions:Levies on Financial Transactions: General/stocks/bonds/ currency

Volume/Potential Financial transaction taxes for years on instruments including bonds and stocks - applied in many countries: UK, USA, China, India, ColombiaFinancial transaction taxes for years on instruments including bonds and stocks - applied in many countries: UK, USA, China, India, Colombia Currency: $500 tr $1.9 tr. per dayCurrency: $500 tr $1.9 tr. per day $800 tr $3.2 tr. per day < $1,000 tr $4 tr. per day

Why it is feasible? Computerised collection – electronic/automatedComputerised collection – electronic/automated Rate: 0.005% %Rate: 0.005% % Revenue: UN University – $33 - $60 billion per annumRevenue: UN University – $33 - $60 billion per annum UNITAID – important precedentUNITAID – 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?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? Press: bail out banks; war-chest for IMF; augment EU budgetPress: 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 institutionsHistorical 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 stableA 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 systemAt 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?Can the world afford especially in these financially difficult times to leave this vast revenue stream untapped?

Responding to Health Sector needs Predictability – even in adverse times the foreign exchange market is still growingPredictability – even in adverse times the foreign exchange market is still growing Providing a long-term structural difference: Health system strengthening; clean water; the major diseasesProviding a long-term structural difference: Health system strengthening; clean water; the major diseases The elephant in the roomThe elephant in the room

Conclusions No monopoly on this ideaNo monopoly on this idea Unique window re all things ‘banking’Unique window re all things ‘banking’ The Leading Group – Paris, Spring 2009The 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!Commitment of govts. & civil society to build on UNITAID success to multiply efforts to make the CTT happen in the coming year!

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