Two years ago, I made three specific proposals for things that could be implemented at the COP 26 meeting in Glasgow
- COP26 - Proposition #1 - Ban all cryptocurrencies
- COP26 - Proposition #2 - Decide how much funding is required and then propose universal FTT and Asset taxes to provide the finance
- COP26 - Proposition #3 - A global Personal Carbon Allowance (PCA)
However, even these eye-watering figures must be hopelessly underestimated. Firstly, BIS only reports figures for a set of 26 countries. But more importantly, BIS doesn't bother to include many major players. The most obvious and glaring absentee is the Options Clearing Corporation, "the world's largest equity derivatives clearing organization". The following graph shows the total number of executed trades per year since 2013, taken directly from their webpage. The number was fairly stable around 4-5 billion a year until 2020. Since then it has sky-rocketed. My number for 2023 is an estimate based on trades up to October, but looks set to be well over 11 billion.
What OCC don't say is the financial value of those transactions. It is not inconceivable that we are talking about trades worth a million dollars each. If so, there could be another $11 quadrillion to add to BIS total.
Even if we only use the figures that are provided by BIS, it should be clear that to generate $3 trillion in funds, it would be enough to impose an FTT of less that 0.02%.
Importantly, this tax would not just be imposed on the High Frequency Traders responsible for a large proportion of the activity, it would be imposed on absolutely everyone on the planet, including you and me. When my pension is paid into my account (I retired from my job with the CNRS on the 1st of July) - 0.02% of it would go to the UNEP. Every time I make a payment by direct transfer or by credit card, 0.02% would go to UNEP.
Would I object, given that I know that the money would be used to help ensure that my grandchildren will have a habitable planet? Of course not. Especially when I know that every time I use my credit card, I am forced to pay Credit card processing fees that can typically range from 2.87% to 4.35% of each transaction - paid by the merchant, and passed on to me. The financial transaction taxes imposed by the banking system are even more outrageous when I use my credit card outside the Eurozone. Those international charges are typically an additional 1-3%. Thus, the FTT required to tackle climate change is hundreds of times less than the transaction taxes imposed by the banks.
Of course, those same banks will say that while it's fine to clobber each of us with what is effectively financial transaction taxes of 4-6%, imposing even a 0.02% tax on the financial sector's trillions of dollars of trading every day would cause the sky to fall in, prevent efficient price discovery, etc etc etc. Don't believe them. It would certainly reduce the incentive to make trades when the margin is less than 0.02%, but trading would certainly continue.
One of the standard arguments against imposing an FTT in a particular area (such as the Eurozone) has been that the traders would simply move their activity elsewhere. But, clearly, if the UN imposed tax applied to absolutely all trades, wherever they occur, and whatever the denomination used for trading, such arguments completely fail.
- Climate Justice - based in particular on a scheme developed with the Cap and Share Climate Alliance
- No borders Tax Justice - that includes the two ideas developed here, namely an International Wealth Tax, and an International Financial Transaction Tax
- Global Basic Income