February 4, 1999
The second hour of debate on the Tobin tax motion was held in the House of Comons on Feb 3. The Bloc Quebecois has proposed that the motion be amended by removing the words "enact a tax on financial transactions" and replacing them with the following: "promote the implementation of a tax aimed at discouraging speculation on fluctuations in the exchange rate." The language is weaker but not seriously so, and if it brings Bloc support (44seats), is worthwhile.
My overall impression of the debate is that some MPs are ill-informed or are being deliberately misleading in their arguments. The taxes hurt 'average' Canadians" myth seems to be the favorite we must debunk as we argue in favour of the tax.
It is clear all our efforts to let MPs know about this issue and its importance is having some impact. In his speach, Yves Rocheleau(BLOC -Trois Rivieres) acknowledges the public groundswell of support growing for the Tobin tax : "Fortunately, an awareness is developing internationally. I would like to take the opportunity to thank Charles F. Johnston of 5th Avenue North in Saskatoon for alerting me to the debate and inviting me to take part."
Please keep those letters to MPs coming. I have summarized parts of the debate below and have the full text available for those who wish to use it in their letterwriting. Please forward copies to as many other MPs as you think relevant (Party leaders, Finance and other Ministers, members of the provincial party caucuses) and send us a copy too.
OVID JACKSON(Bruce-Grey) - NO - we have enough taxes. "Canada is already excercising international leadership. We have a broad strategy to attack the underlying causes of financial market volatility." Ovid is referring to Paul Martin's proposals to increase financial sector supervision ( a good idea but it will not stop speculation) and capital account liberalization (promotes the opening up of the financial sector to foreign investment, particularly for developing countries, which will actually encourage speculation. The reason so much capital flowed into SEAsia (and subsequently out) was due to the removal of barriers to in and outflows of foreign investment).
ROY CULLEN (Etobicoke North) - AGREES IN PRINCIPLE BUT NEEDS TO "CLARIFY A NUMBER OF ISSUES" - concerns that all nations must signon for it it to work, that migration to other jurisdictions will undermine tax and that speculation only results when "underlying economic fundamentals" are not sound.( in his speach, he contradicts this concern by noting that Canada took a financial beating in August in spite of the soundness of underlying factors in the Canadian economy - "Coming back to Canada and the downward pressure on the Canadian dollar vis-a-vis the U.S. dollar that we have experienced over the last year, we are told we experienced a flight of capital to so-called safe havens. I find this curious when the economic fundamentals in Canada are so strong, if not the best among the developed countries."
"I am offended as I am sure all Canadians are when the international financial markets are disturbed profoundly by speculators. Let us examine a tax on financial transactions. Presumably such a tax would be targeted on foreign currency transactions. The targets hopefully would be short term capital movements because investors should really not be penalized or inhibited from moving capital from one currency to another based on long term decision making or structural decision making. "
WAYNE EASTER(Malpeque-PEI)(Parl Sect to Minister of Fisheries and Oceans) - YES -" We have to enter into that debate at a global level and go out there and make the arguments for putting in place a Tobin tax. I realize that even if we had all the industrial on side it would not be sufficient for the proposal to work. But we have to start somewhere. I suggest we can start here, that we need strong political will on the part of the Government of Canada and on the few allies that we can achieve in the beginning and exercise that political will so that we can institute a Tobin tax some time down the road."\
"I heard the member from the Conservative Party speak earlier. He used the example of someone in the community who did a lot of volunteer work. I respect what that individual did. I applaud what that individual did. But the member tried to leave the impression that this was a tax that would hurt that individual. It would not. I doubt that individual was a money speculator. He was not a financial money speculator. Who are these people? I am a primary producer and I know about speculation in terms of the hog market, the grain industry and the beef industry. I know very well that those people that play those markets make huge profits many times by shuffling a little paper around and playing with the futures market and so on. The primary producer who does all the work, who takes all the risks, who creates the investment and puts his family to work and works himself, ends up many times loosing money. The speculators make money. It is even worse when we get to the financial speculators, the money speculators. They play games, not only with countries, and with the new technology that is available today millions even billions of dollars can be moved in the flash of a second."
JASON KENNEY(Calgary SE) - NO - basically the same rationale as Jackson. To prove that taxes don't work, Kenney cites how the 16th century English window tax caused citizens who could afford windows to blacken them to avoid payment. "To this day in some small villages in England we can see what were once framed as windows covered up by plaster. To this day we still see the unintended consequences." Using that bizarre analogy, he goes on to state that Tobin won't work because taxes dampen Canadian economic growth, all nations would have to implement it and speculators would move investments to tax havens (see Tobin Myths for refutation of these arguments).
"It would not work. It could not work. Let us not hamper Canada's economy by imposing such an unworkable international tax regime."
YVES ROCHELEAU(Trois Rivieres) - YES - "We would kill two birds with one stone with this world fund (referring to the revenue generated by the Tobin tax), which could be used effectively to fight poverty worldwide. And better distribution of wealth would be achieved. This would have the effect of counteracting the negative effects of globalization and slowing down the progress of the unbridled neo-liberalism which has reigned for far too many years already."
"We have seen the way these faceless speculators, with no sense of social responsibility, no accounting to anyone, whose job it is to type away on computer keyboards everywhere on this planet, checking out interests rates that are too low, fostering their own clients' interests, thumb their noses at community or national interests."
NELSON RIIS(Kamloop, Thompson, Highland Valley) - co-sponsored motion - YES - "It is interesting to listen to the debate and the commonality... I have not heard anybody yet say that they are in love with the currency speculators, that currency speculators are somehow helpful, that currency speculators have done anything good for the economy, or that they are doing anything good for society generally."
" If the international community was in support of some form of a Tobin tax, why would Canada not be in support of it? I listened to the leader of Germany the other day(referring to the World Economic Forum in Davos, Switzerland). He is in favour of some form of a Tobin tax. I returned not long ago from the Asia-Pacific parliamentary forum. Twenty-two nations from around the Pacific came together. This was a major item. Unanimously they agreed that some form of a Tobin tax was appropriate for their countries. Yet some of my friends in the Liberal Party bad-mouth this concept. They are bad-mouthing the leadership of Asia-Pacific. What are these people thinking? I know that some of my friends are here as voices of the financial elite of the country. I can understand why they would not support this legislation. However, most people representing constituents in the House of Commons would say "Show me a constituent in this country who would vote against the idea of a Tobin tax". If I went to Calgary today and said "Do you folks in Calgary like the idea of some form of control on international currency speculators?", I bet there would not be a single Calgarian who would stand and say they would not want this kind of tax."
" When we look at the media and listen to some of our colleagues we hear a financial elite who just do not want any kind of meddling in their marketplace. They want to have carte blanche freedom to do whatever they want. If that results in countries being devastated, like we have seen as a result of currency speculators, so be it. We even came close in our own country just a few months ago when we watched our dollar collapse day after day. In August last year our currency collapsed day after day, hour after hour, simply because speculators were speculating on our currency. It had nothing to do with the state of our economy."
GILLES BERNER (Tobique-Mactaquac) - NO - used the "Canadians hate taxes" rationale to justify his rejection of Tobin. "In all of my travels in the last six weeks and in all of my discussions with constituents not one single person said that what this country needs is a new tax. Since I was elected in June 1997 I cannot think of one single time when any voter asked me to raise their taxes.
He gave a long-winded tale of poor John Minard who worked 6 days a week , gave his time and money to minor hockey and always had money for the Christmas Miracle for Kids. "Is this project important enough that people like John Minard should have less money to feed their families?" He claimed that Canadians buying Savings Bonds and saving for their retirement would be taxed ( NOTE that a Tobin tax will not affect any currency transaction less than $10,000 - The average currency transaction is $4 - 25 MILLION US $ !!)