Young party members of the Christian Democratic Party propose a tax to combat speculation

In a recent report published in 2010, the Young Commission for Finance and Economics of the French Christian Democratic Party, created by Christine Boutin, proposed "taxing short-term speculation" to limit its adverse effects.

Technically, this means taxing capital gains by means of a coefficient which decreases over time. This coefficient is very high for short holding periods (from 1 day to 1 week) and is annulled completely for periods of more than three years. The objective is to limit the potentially destabilizing power of speculators in the markets, and to promote long-term investment practices.

What would the advantages of such a tax be? According to Constant Remond, head of the commission, it would "reduce the risk of market manipulation by certain professionals, attenuate rapid fluctuations and balance out prices around the real value of the business in its economic context; combat "herd behaviour" by financial professionals and avoid uptrend and downtrend exaggeration”.

This is an interesting idea, which should be looked at with regards agricultural financial assets, which have been increasingly more vulnerable to speculation since 2005 and saw a peak at the height of the crisis in 2008. France is well aware of the problem and speculation on raw materials will be at the heart of the upcoming G20 talks, particularly during the summit to be held in France in 2011.