Blaming speculation for the high price of food and oil, and arrogance and greed for the global economic crisis, the Dominican Republic called on the United Nations today for new market rules and proposed a 5 per cent tax on financial transactions to spur growth and prosperity.
With $4 trillion circulating every day untaxed around the world in financial transactions, such a tax would bring in $4.8 trillion annually, Dominican Republic President Leonel Fernández told the General Assembly on the second day of its 66th annual General Debate.
“Mr. President, $4.8 trillion would not only solve problems related to some countries’ sovereign debt but at the same time there would be enough fresh resources for investing, which would allow a rapid recovery from the current financial and economic world crisis,” he said.
If it was felt that this is not an appropriate way for States to collect income, he noted that more than $10 trillion deposited in tax havens, increasing by $600 billion each year, without a dime entering the tax department of any Government, he added.
“In sum, we are forced to accept an increasingly alarming situation of social injustice because of the indisputable and uncontrollable power held by a circle of the world economic elite,” he declared, singling out financial speculation in food and oil, which saw prices of soy, corn, rice and wheat increase by between 107 and 136 per cent from 2006 to 2008, adding 150 million more people to those who go hungry around the world for a total of over 1 billion.
Citing international analysts for figures showing that 30 to 40 per cent of increases for commodities are attributable to financial speculation on futures contracts, he called for limits on the volume of such insurance companies, investment banks, pension funds, and equity funds that are in no way involved in the physical handling of the product, along with an increase in deposit guarantees to disincentive speculative transactions that only contribute to price volatility.
The global financial crisis has been produced by “by a lack of clear rules in the international financial system, by arrogance, by greed, and by an uncontrolled eagerness for amassing wealth,” he said.