A Tobin tax refers to the suggested tax on all trade of currency across borders. This is supposed to put a penalty on short-term speculation in currencies. The proposed tax rate would be low, between 0.05 and 1.0 per cent.

The president of Venezuela, Hugo Chávez, recently announced that Venezuela is currently studying the implementation of such a tax.

Since one country acting alone would find it very difficult to implement this tax, many argue it would be best implemented by an international institution. It has been proposed that having the United Nations manage a Tobin tax would solve this problem and would give the U.N. a large source of funding independent from donations by participating states.

The name comes from the economist James Tobin.

See also

ATTAC (Association for the Taxation of financial Transactions for the Aid of Citizens) an organization that promotes the idea of a Tobin-type tax.

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