Will the G20 Agree to a Venture Philanthropy Tax?

Welcome to the future a world of venture philanthropy, where globally governments levy a small tax on financial transactions that will stop hunger in Africa and give people the medicines and health care they require in the developing world. This new world could just be around the corner as a new report just published looks at the rapid increases in high frequency trading (HFT), which has created a dangerously unstable web of computer-driven trading that spans global stock markets, putting them at risk of a system-wide 'flash crash'. HTF has the potential to cause havoc in markets for commodities that are central to our economies and the lives and well-being of hundreds of millions of people.

Incredibly, as much as 77% of trading in the UK stock exchange is now computer driven with shares bought and sold hundreds of times a second. In the US traders boast that the longest they hold stock for is 11 seconds. Experts believe that HFT is a dangerous threat to market stability. A Robin Hood Tax on financial transactions could stop the machines in their tracks, as well as raising sorely needed finance to fight poverty and climate change. Hong Kong, Brazil, South Africa and Korea are all ahead of the game and have applied some form of this venture philanthropy tax, while, in Europe the economies need to catch-up.

The readiness of Chancellor Merkel in Germany and President Sarkozy in France to propose such a tax at the European level is significant. Together they need to make a concerted effort to build a coalition of European countries; a huge effort in itself due to Europe's current economic plight. Sarkozy, who is also President of the G20, believes the revenue raised from such a tax should help fight poverty and climate change; a thousand economists from 53 different countries agree with him! Sarkozy, has commissioned billionaire venture philanthropist Bill Gates to examine innovative ways to fund development.

There are critics who claim that this venture philanthropy idea was tried years ago in Sweden and failed. Supporters for the Robin Hood tax say that such threats should be faced because they are unreasonable and that the time is ripe. It could raise a further £3BN and the IMF has stated that this it would fall on the richest in society. Robin Hood tax campaigners are now active in over 40 countries. They need to keep up the pressure to ensure both that the tax happens and critically that the funds raised are directed at helping poor people worldwide.

Markets should work in the interests of society not the other way around. A Robin Hood Tax would be a big step towards a world in which finance behaves responsibly and pays its fair share. The French G20 takes place this November in opulent Cannes—a perfect place to see venture philanthropy happen.

Photo Credit: A Magill