The CTL would apply a small levy of just 0.005% on four major currency transactions which could raise at least $33 billion annually to provide urgent additional funding to meet the health Millennium Development Goals (MDGs) that are perilously off-track.
This week European leaders are expected to present a levy on currency trades and related proposals at the Summit. The levy, proposed by France, would have no significant impact on the retail economy or trade and it would not distort the financial markets.
The new revenue would however jumpstart progress to reach the health MDGs including reducing child mortality, improving maternal health and combating AIDS, TB and malaria.
“Donor and recipient countries have existing financial commitments which must be met but this would still leave a US$100 billion funding gap in the US$251 billion target identified by the World Health Organisation,” said Anton Kerr, Policy Manager at the Alliance.
“Innovative financing mechanisms are urgently required to raise the critically needed resources for health. The CTL is we believe the best way to do this.”
City firm INTL Global Currencies in London are a firm specialising in foreign exchange with developing countries. In May 2007 they ran a week long trial of a CTL. It raised 4,000 for the charity Widows and Orphans International.
Giving evidence at the All Party Parliamentary Group for Debt, Aid and Trade enquiry, Philip Smith of INTL Global Currencies explained, ‘It’s not a huge amount but we felt it was illustrative of a week’s turnover for us across all our countries. And we’re not an enormous entity which would have raised a lot more.’
He reported it took the press of a button to add the levy into the system. INTL had informed its clients about what was happening and said the feedback was very positive. Nobody had commented on any problems and added that rolling the levy out on a larger basis would be very simple. ‘It’s just an extra feature in our dealing system and I would imagine every financial institution would have a similar set-up.’
The global financial crisis has without doubt hit the poor hardest. The economic meltdown and the role the financial sector has played has led to a demand to re-examine the rules, regulations and boundaries of the sector.
“G20 leaders have the opportunity to show their solidarity with the poor and vulnerable in our world. The foreign exchange markets are one area of the financial industry that has historically remained exempt from tax. It’s now time this changed,” said Kerr.
For more information about a CTL read the briefing paper, YES to Health – The Currency Transaction Levy. Funding the health Millennium Development Goals.
The Health Millennium Development Goals
MDG 4: Reduce child mortality
MDG 5: Improve maternal health
MDG 6: Combat HIV/AIDS, malaria and other diseases