International Solidarity Levy (ISL) - Japanese Parliamentary Group

Change of Nature of International Economy: Tax Havens and Capital Flight
- 50% of both world trade and financial transactions are made through tax havens
   ⇒Making money flow transparent and plugging the leaks are indispensable 
 
Why solidarity “levies”
Each country imposes tax on the rich, redistributing revenue to the poor, using it for education, medical care and welfare, solving various problems, stabilizing society through taxation
?Tax facilitates transparent, democratic and accountable governance
?Reducing tax on “Goods”, while imposing heavy tax on “Bads”
? “Goods” for environment and society: tax reduction, tax exemption, subsidies
? “Bads” for environment and society: heavy tax, surcharge
⇒Example: Ecological Tax Reform
 
A Case Study of Global Tax: Airline-Ticket Solidarity Levy
Imposes a tax on those who benefit from globalization, redistributing revenue to those who benefit the least from globalization
?From 10 to 40 euros on first-business class passenger fare
?From 1 to 4 euros on economy class passenger fare
?Revenue is used for improving access of the poor to the treatment of HIV, malaria and tuberculosis
?28 Feb-1 March 2006, “Paris Conference on Innovative Development Financing Mechanisms”
 
A Case Study of Global Governance for Global Tax: UNITAID
International Drug Purchase Facility (IDPF)
?Established in 19 September 2006
?Mission: to scale up access to treatment for HIV/AIDS, malaria and tuberculosis for the poorest people in developing countries by lowering the price of quality drugs and diagnostics and accelerating the pace at which they are made available
 
Types of Global Tax
?Economic-related tax
?A Currency Transaction Tax (CTT)
?A Currency Transaction Development Levy (CTDL) etc.
?Environment-related tax
?Global carbon tax
?A tax on natural resources etc.
?Peace-related tax
?Arms sales/trade tax etc.
?Public health-related tax
  ?Air-ticket solidarity levy etc.
 
All Japanese Parliamentary Group on International Solidarity Levy
?Launched on 28 February 2008
?Key politicians are included
?3 Purposes:
?Research and study international solidarity levy
?Become a full-member of the Leading Group
?Take a presidency for a Currency Transaction Development Levy (CTDL) task force
 
Where should tax be imposed? Power of Global Financial Capital
?World economy (“Real” economy):  $36 trillion
?Financial capital (“Virtual” economy):    $130 trillion
? “Virtual” economy overwhelms “real” economy
?Purpose of financial capital: short-term profits
?All actors, including multinationals have to keep raising their profits using any means
?Otherwise, massive amounts of shares will be sold off by ever-stronger financial market
 
Where should tax be imposed? Huge Financial Flows
<e.g.>Foreign exchange market
In 1973:? ? $4 trillion
In 1980’s?  $40 trillion
In 2007:    $770 trillion
⇒A number of financial crises
In 1994?  Mexican Crisis
In 1997?  Asian Crisis
In 1998:  Russian Crisis
In 1999?  Brazilian Crisis
In 2001:  Argentina Crisis???
⇒No tax on foreign exchange market
 
Reason why Japan should implement CTDL
?Redistributing finance from Global Rich to Global Poor
⇒Could contribute to solving climate change and to achieving MDGs
?Gaining control of global finance in our hand
⇒Regain political control
?Japan could lead global governance
⇒If Japan realizes CTDL, creating financing for climate change and MDGs, it would be a historical achievement!
 
Response of Japanese Government
?Liberal Democratic Party: “International solidarity levies should be studied further”.
?Fukuda Vision:  “Government will study global environmental tax”
⇒Study Group on Global Environmental Tax was established in September 2008 in Japanese Ministry of Environment
 
Establishment of Japanese Commission for the Promotion of International Solidarity Levies (Terashima Commission)
?Discussing a realistic plan to realize international solidarity levies, especially CTDL
?Examining technical difficulties of CTDL, concrete use of revenue, and its governance
?Based on these examinations, striving for lawmaking for ISL
?Currently, conducting hearing on technical issues
 
SOURCE:
“Understanding International Solidarity Levy: its potential, issues and future”
By Takehiko Uemura, Associate Professor, International College of Arts and Sciences
Yokohama City University
(Aug 2009)

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