The Tobin tax proposal : Background, issues and prospects

Less exchange rate volatility facilitates trade, investment and employment, for which, however, substantial international policy collaboration is needed. Tobin's proposal for a small uniform tax on foreign exchange transactions would be an important step, reducing fiscal deficits while discouraging exchange speculation. The fear of hostile reaction from the globalized financial markets makes putting the proposal on the table a more delicate matter for individual governments than for the UN. Doing so would strengthen the UN's claim for a slice of the prospective revenue.