Author: Liana Verdini

Source: Correio Braziliense - Brasília / DF - COLUMNS - 31/05/2010

In the midst of a European crisis - with Greece, Spain and Portugal in the eye of the hurricane - Germany, last week, frightened the world by proposing to its peers from the Old Continent to charge a fee to cover each financial transaction. The money raised, say the Germans, would be used to set up a fund to cover expenses with eventual future financial difficulties of institutions and to reimburse the government with the aid provided during the crisis of 2008 and 2009.

The idea is not new, as we know very well, we Brazilians, who paid the CPMF for years in a row, that Provisional Contribution (which ended up definitive for a long time) on Financial Transactions, better known as a check tax or better defined as a tax on any banking operation that the citizen did.

The reaction of the other European countries was bad, but Germany is not alone in this. In mid-May, Europe's locomotive held a seminar to discuss the topic in style and invited American economist Dean Baker, a doctorate at the University of Michigan and co-director of the Center for Economic and Political Research, Washington, to present the theme . Baker could not go but sent a document that seems to have helped to convince the Germans of the viability of the tax.

The economist began by pointing out that in the United Kingdom - England, Wales, Scotland and Northern Ireland - a fee has been levied on stock exchange transactions for decades. Before the recession, this tax raised 4 billion pounds a year (R $ 10,5 billion), equivalent to 0,3% of the GDP there.

In Japan, during the height of the stock bubble of the 80s, a tax on financial transactions was also established, which came to represent 4% of federal tax revenues.

Weight defenders
Baker recalled that John Maynard Keynes, a British economist at the beginning of the 20th century and an advocate of the interventionist state, already advocated the imposition of taxation on the financial market as a way to get investors to think in the long term and keep them out of immediacy.

According to the American economist, a famous argument by Keynes is that "when the market starts to resemble a casino, it is unlikely to fulfill its economic function well".

The document also listed other prominent economists who have spoken out in favor of financial taxation. The 1981 Nobel Prize winner in economics, James Tobin, proposed taxing speculative foreign capital as a way to regulate the volume of transactions in the market in certain circumstances.

In 1989, it was the turn of the Nobel Prize for Economics Joseph Stiglitz to defend taxation on the financial market, but for short-term operations. Another economist Lawrence Summers, who would become the United States Treasury Secretary in the Clinton administration, has also advocated taxation. And several others, such as Paul Krugman, Dennis McFadden and Jeffrey Sachs.

Popular support
To show that Germany had to gain from the proposal, Baker also said in the document that as soon as the 2008 crisis set in, civil society itself in various parts of the world began to defend taxation, claiming that this would be a way of raising resources for aid operations to developing countries and also to finance the cost of reducing greenhouse gas emissions.

Finally, a portion of the resources could also be used to offset the costs of financial failures resulting from crises and the increase in public debt to face a long period of high unemployment. He also said that in the United States there was great interest in the topic after the crisis.

And us with that?
You may be asking: So what? The discussion is not ours and Europe is far away! It is true, but it is good to remember that we are in an election year and next year we will have a new government.

And when a tax that we already had starts to be defended by a developed country, it is good to be aware. This account may not get there, but it may end up putting pressure on Brazilian pockets in the near future.

Until 2008, when the tax was levied in Brazil, the volume collected was around R $ 40 billion, equivalent to 1,4% of GDP, with a rate of 0,38%. And it seems quite reasonable that the topic will come back to haunt when it is remembered that public spending goes on and on and the government is always interested in increasing revenue.