on the other hand, is its double dividend.
A global tax on currency conversions may also have some detrimental effects for
developing countries. First, there could possibly be ramifications against the use of newer
currencies for international transactions. The number of currencies used could diminish and
converge towards the use of the usual few. Second, not all short term capital flows may be
considered destabilising at all times for all countries. For those developing countries which
are liberalising and opening up to international trade and finance, short term flows could
provide a stable stock of reserves, even while their movements may be quite brisk. A tax on
international transactions may thwart some of these emerging features of global financial
markets from a developing country perspective.
All countries should have to agree to the introduction of the Tobin tax. if it were to
function efficiently. The global carbon tax could conceivably be introduced without all
countries having to bear the same increase in cost right from the start. Nevertheless, the
successful implementation of either tax would eventually require the services of a well trained
global tax administration corps. Their need should be felt, in any event, as world financial
markets get increasingly integrated with transboundary tax effects. The idea of an
autonomous international tax institution has, perhaps, arrived.