Transactions tax on the front page

I was surprised to see the IMF highlighting the potential virtues of a Financial Transactions Tax (FTT) on the front page of its website.  The Bloomberg news service earlier had a good story about on the background of this idea, tracing it back to Keynes.   This is a proposal that progressive economists and unions have advocated for many years, so it is gratifying to see it get some serious recognition there.

The IMF story reports on a speech that dealt with this issue by IMF Managing Director John Lipsky to a Bank of Canada seminar in Vancounver on Monday.   In keeping with their directions from G20 leaders, they have framed this more as a way for governments to recover the billions in public support used to prop up the financial system during the crisis, than as a way to slow down and tame financial and currency transactions, as James Tobin had proposed with his “Tobin Tax”.

Lipsky will be heading an IMF study group on this issue, with an interim report going to the G20 ministerial in April and then a final going to the June 2010 G20 meeting in Toronto/Huntsville.  It will of course be interesting to see what position the Canadian government takes on this issue.