The Progressive


A project of Common Dreams

For Immediate Release

Jon Slater +44 7876 476403,

$280 Billion Bailout for Poor Need Not Cost Ordinary Taxpayers Any More Money


G20 finance ministers
meeting in London this weekend should provide a $280 billion bailout
for millions of poor people struggling to survive the economic crisis,
Oxfam said today.

A currency transaction tax is one of three measures that could raise
much needed funds for developing countries without putting any extra
burden on ordinary taxpayers. The proposals are set out in a new Oxfam
briefing paper, Money for Nothing: Three ways the G20 could deliver up to $280 billion for poor countries.

Reforming tax havens alone could release $160bn, reallocating an
already agreed IMF bailout could free up another $89bn, and introducing
a currency transaction tax could raise at least a further $30bn - each
a significant sum to help poor people suffering in the crisis.

The money is desperately needed to prevent the crisis derailing
efforts to reduce poverty as developing countries suffer job losses
because of falling trade and capital flows. According World Bank and UN
estimates, between 50-100 million more people will be trapped in
poverty this year, forced to survive on less than $1.25 per day.

Max Lawson, Oxfam senior policy adviser, said: "The beauty of these
proposals is that they allow the G20 to bailout poor people without
asking ordinary taxpayers at home to put their hands in their pockets.
Rich countries that spent $18 trillion bailing out banks should not be
allowed to plead tight budgets as an excuse for failing to help poor
people - especially when there are alternative sources of funding
available that would cost them little or nothing.

"A currency transaction tax for development would force fat cat
bankers to help clean up the mess caused by their greed instead of
returning to bonuses as usual.

"The G20 is already clamping down on tax havens but it must ensure
the benefits are not restricted to countries that have the power to
call these states to account.

"G20 finance ministers should ensure that it is the poorest people
in the world that benefit most from the IMF's distribution of special
drawing rights.

"G20 Finance Ministers have a real opportunity to ensure that poor
countries receive proper protection from a crisis they did nothing to
cause. Millions more families are being forced to make impossible
choices between buying life saving medicines, sending their girls to
school or buying food for their next meal," Lawson said.

The G20 in April promised to provide $240bn to help developing
countries deal with the financial crisis - including $50bn for the
poorest. But the World Bank estimates that developing countries will
need up to $635bn in 2009 just to stand still.

Much more is needed to reduce poverty, increase the number of
children who attend school and tackle health problems such as HIV/AIDS
and malaria.

How the three proposals would work:

Implement a Currency Transaction Tax (CTT) of at
least 0.005% on international currency transactions. It is estimated
that such a tax could generate a minimum of $30 billion per year if
applied to the four major international reserve currencies (US Dollar,
Yen, Euro and British Pound). If more currencies were included, this
figure could increase as high as $50bn. A slightly higher rate could
also provide more resources for government spending in rich countries
facing cuts in services.

Transfer half of rich countries' new Special Drawing Rights allocations.
Agree that at a minimum all the G8 and other major donor countries will
transfer half of their allotted new allocations of IMF Special Drawing
Rights (SDRs) to Low Income Countries. SDRs are a form of IMF quasi
currency distributed to member countries. The April G20 agreed to
create $285 billion worth of SDRs, and rich nations will receive $177
billion of this amount. Oxfam is calling for half of this, $89
billion, to be transferred to the poorest countries.

Deal with tax havens. Put in place a multilateral
agreement for the automatic exchange of full tax information and
require country-by-country reporting of subsidiaries, sales and profits
by multinational corporations, to help developing countries recoup lost
tax revenue. This could result in a further US$160 billion for poor
countries, and at the same time would enable rich countries to recover
their lost tax revenues. The current OECD initiative on tax havens,
supported by the G20, relies on bilateral agreements between countries.
To date no developing country has signed a bilateral agreement with a
tax haven.

Oxfam International is a global movement of people who are fighting inequality to end poverty and injustice. We are working across regions in about 70 countries, with thousands of partners, and allies, supporting communities to build better lives for themselves, grow resilience and protect lives and livelihoods also in times of crisis.