France sees transaction tax as best to raise climate funds

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A financial transactions tax is the best way to raise funds to battle global warming, but France expects a tough fight to get an agreement during its G20 presidency, Finance Minister Christine Lagarde said Tuesday.

"We know it will be a real difficult battle because a number of countries are opposed, beginning with the United States," she said at a conference organised by the International Herald Tribune and France's diplomatic academy.

Under the Copenhagen climate agreement reached in December 2009, developed nations are to begin funding $100 billion (74 billion euros)a year of projects to mitigate climate change effects in developing countries from 2020.

Lagarde said looking at current deficits it is unrelistic to expect the funds to come from direct budget contributions.

"So the alternative financing is going to be an innovative financing," said the minister.

She said financial transaction tax on currency transactions is feasible as they are easily traceable, and that the small tax would hardly be felt on each transaction but as the market was big would raise large amounts.

She said France, which holds the G20 presidency this year, was open to other ideas on how to raise the $100 billion in climate change funds.

© 2011 AFP

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