Gates: Limited financial tax would work

A tax on financial transactions does not need to be universal to be effective and could raise substantial resources, according to a report prepared for the G20 and obtained by AFP Thursday. France, this year's head of the Group of 20 advanced and emerging-market economies and a proponent of such a tax, has tasked US billionaire Bill Gates to prepare a report on development financing, to be presented at the G20 summit next month. A summary of the report points out that forms of financial transactions taxes (FTT) already exist, as is the case in Britain and India, "and therefore seem to be feasible even without universal adoption." "If G20 members or some other set of countries (e.g., within the EU), can agree on the outlines of an FTT... it could generate substantial resources," according to the document. A "small tax" of 0.1 percent on equities and 0.2 percent on bonds "would yield about $48 billion on a G20-wide basis, or $9 billion if confined to larger European economies." While France and Germany, which have called for such a tax at least at the level of the European Union, have been hesitant to speculate on how much money it could raise for poorer countries, the report forecast a "substantial" part of the revenues could be allocated to development. Gates, the Microsoft founder-turned-philanthropist, is to present the report to G20 leaders at a November 3-4 summit in Cannes, France. Europeans have sought to implement either a tax on profits or turnover from the financial sector since governments were forced to bail out banks caught up in the 2008 credit crunch that started in the United States. The United States, Britain and other countries have opposed such a tax. According to proposals submitted to the European Commission, French President Nicolas Sarkozy and German Chancellor Angela Merkel want at least a Europe-wide tax, but Britain and Sweden -- EU members but not part of the eurozone -- have made their opposition known. Until now, Gates, co-chair of the Bill and Melinda Gates Foundation, has not strongly backed the FTT idea. In an April visit to Paris, he indicated that Sarkozy expected him to find a way for countries to join this initiative. "But it's not easy, there are still questions," he said. "If there were a handful of countries (participants) and not the US, what's the point?" An update on the report is expected to be presented Friday at a G20 ministerial meeting dedicated to development issues in Washington on the sidelines of the International Monetary Fund and World Bank annual meetings.