Ireland has been urged to use its Presidency of the EU to push for the introduction of an international tax on currency speculation that would discourage predatory trading and raise funds for overseas development aid.Ms Susan George, a veteran campaigner and author on development economics, said the EU should not be discouraged by US opposition to the so-called Tobin tax.
She argues that that it should be introduced on a regional level initially.
"It should start with the euro, and could be rolled out for other currencies after that. If you sit around and wait for the Americans you will be waiting forever. Europe is going to have to take the initiative."
Ms George, who was speaking at a conference in Co Kildare at the weekend, said the French, Belgian and Finnish parliaments had already declared their support for the financial transaction tax "on the basis that other countries would agree to it too".
Under the proposal, each currency trade would be taxed at up to 0.5 per cent with the intention of leaving long-term investments intact but discouraging short-term currency trading, which has been blamed for causing economic crises in places like south-east Asia, Russia and Brazil in the late 1990s. The initial concept, proposed by an American economist, the late James Tobin, has since been refined by a German economist, Mr Paul Bernd Spahn, whose two-tier structure is now being championed by campaigners.
Under Mr Spahn's proposals, a minimal-rate transaction tax would function on a continuing basis while an exchange surcharge, set at a much higher rate, would be triggered during periods of exchange rate turbulence as an anti-speculation device.
The issue was vigorously pursued by the Belgian Presidency in 2001 but has since slipped off the agenda of Ecofin (the Council of European Finance Ministers) meetings.
Speaking in the Dáil before Christmas, the Minister for Finance, Mr McCreevy, said it might be the case that some European Ministers had mentioned the Tobin tax at meetings of the General Affairs and External Relations Council.
But "the Council has not reached any decisions or adopted any conclusions on this matter".
The Minister himself said he was "unconvinced of the feasibility of such a tax", claiming among other things that it would "inevitably lead to avoidance of the tax", and that it would be "unworkable" unless every country in the world agreed to implement it. But Ms George said neither was a valid reason to oppose the tax on euro-transactions.
For Ireland to wait for the rest of the world to agree "is a good way of not doing nothing".
She added: "It is true the US would probably try to hit back. They would not want it to be applied to them. But people are always going to try to avoid tax. Even if we trap 40 per cent of transactions it would make a huge difference."
An OECD study has estimated that a Tobin tax of 0.5 per cent on foreign currency trading conducted in 2001 would have raised about €1.6 trillion in revenue that year alone.
Ms George said revenue from such a tax would make up for funding cutbacks in overseas development aid.
"We are now at the point where there is a net transfer to the north from the south - or to the rich from the poor - of $200 million a year, mainly in debt service. Meanwhile, the rich give the poor about $50 billion a year in development aid."
Ms George, author of several books, including How the Other Half Dies, is vice-president of Attac France, which campaigns for reform of international trade and taxation laws.
She was in Ireland to speak at a conference organised by the campaign group, AfrI.
