28 July 2008

Government to discuss possible introduction of international solidarity levy

*Click the title above to read the Japanese version of this release.

According to several news sources, the Japanese government has begun "discussions on the possible introduction" of international solidarity levies. The Tokyo Shinbun article dated July 28 read as follows:
The government on Sunday launched discussions on the possible introduction of an international solidarity levy for currency trading activities and airline ticket purchases to help fund development assistant programs for developing countries. In the coming months Japan is expected to officially join the international group of countries that are promoting the initiative.
According to the article, the government is considering "a currency transaction development tax of as low as 0.005 percent on foreign currency trading activities" and the implementation of "an airline ticket levy with which it can collect taxes from relatively wealthy people."

The currency transaction development tax, known globally as CTDL or Currency Transaction Development Levy, has been the policy target of our Office since the launch of the Parliamentary Group on International Solidarity Levy in February this year. We believe the "international group of countries" that promotes the international solidarity tax initiative refers to the Leading Group on Solidarity Levies to Fund Development, which our Parliamentary Group formally requested the government to join in June.

The Office of Senator Tadashi Inuzuka welcomes the government's decision to launch its official consideration of a possible introduction of an international solidarity levy. We believe the fact that their policy options include CTDL and airline ticket levy is a testament to the works of the Parliamentary Group in the Japanese National Diet and we will continue to put our utmost effort in materializing the introduction.

Below is a Kyodo News article which is deemed as the primary source of the news.
Monday, July 28, 2008

'Solidarity levy' eyed to pay for foreign aid

Kyodo News

The government on Sunday launched discussions on the possible introduction of tax systems for currency trading activities and airline ticket purchases to help fund development assistant programs for poor countries, Foreign Ministry sources said.

The government is considering the "international solidarity levy" mechanism to secure funds to help the world achieve the U.N. Millennium Development Goals aimed at stamping out poverty and tackling health problems in developing nations, the sources said.

Various studies have shown that the conventional official development aid system has failed to provide sufficient funds to achieve the goals. Some countries have advocated innovative financing mechanisms, including international solidarity levies.

The government plans to officially join the Leading Group on Solidarity Levies to Fund Development, a French-initiated international organization set up in 2006. Japan has been an observer country so far.
The government is mulling a currency transaction development tax of as low as 0.005 percent on foreign currency trading activities, according to the sources.

It also aims to implement an airline ticket levy with which it can collect taxes from relatively wealthy people, they said.

Tetsuji Tanaka, head of the Tokyo-based citizens' group altermonde, which promotes the financing mechanism, hailed the government's move.

"The world needs to create a framework in which money flows from people reaping the benefits of globalization to those suffering the negative impacts of the phenomenon," he said. "Japan's planned participation in the Leading Group will mark a huge step toward realizing such a system."

According to the Foreign Ministry, as of last year 28 countries had announced their intention to introduce the airline ticket levy, of which eight countries, including France and South Korea, have done so. The proceeds have been donated to the Leading Group and used for such purposes as tackling infectious diseases in developing countries.

No country has yet put into practice the currency transaction development levy.

Daily transactions in global currency exchange markets totaled $3 trillion in 2007. If a 0.005 percent levy were imposed on the transactions, about $33 billion, or one-third of the current level of global ODA, could be gathered.
Some financial industry experts point out that the levy system would also help stem transactions of speculative funds.

Calls for international solidarity levies have been growing in Japan. Some lawmakers established a bipartisan group to promote the system earlier this year.

In June, Prime Minister Yasuo Fukuda indicated his intention of examining the possibility of introducing the system to secure financial resources to combat global warming.