A campaign that’s time has come: Robin Hood Tax #rht

I’ve long supported the idea of a Tobin Tax some form of Tobin-like tax (update 11th Feb) – taxing financial market transactions a minute amount to fund development and investment in poverty reduction (and more recently, climate change prevention, adaptation and mitigation). The trouble is, talking about a financial transaction tax isn’t the easiest thing to do.

So it’s fantastic to see the launch today of the Robin Hood Tax campaign. If you support one campaign this year…make it this one.

5 thoughts on “A campaign that’s time has come: Robin Hood Tax #rht”

  1. As a fellow PPE grad (though more PP than E, I must admit), I know the definition of the word, but not really its impact.

    What I can’t see from a quick look around the campaign site is where the £100-200bn would go otherwise. Is it real money? It can’t all go in bank bonuses or into reserves, can it? What would be the impact of extracting it through tax – would the cost of transactions be passed onto end customers in some other way?

  2. Hey Steph,

    There’s an Infographic and bit of analysis here on sources and proposed destinations of finance:

    I understand that a Tobin tax has a number of impacts. As well as raising revenue, it does act as a mechanism for slowing international currency transactions and other trades down marginally. I.e. at the moment multi-million pound transactions betting on changes in exchange rates etc. will take place for just a 0.05% gain. A Tobin tax reduces (or in the 0.05% case, eliminates) the gain on such marginal transactions, and, potentially has stabilising effect on financial markets.

    The appeal of a Tobin tax is that it primarily taxes short term speculative financial flows (or is a heavy tax on such flows, and more marginal on others).

    I will admit to also being a primarily PP, PPEist, so in terms of how/the extent to which the transaction costs on longer-term investment may be passed onto end-customers, I’m unsure. However, as a believer in the justifiability of some forms of redistributive taxation – I’m certain there is value in opening up the debate about how we can design fairer financial systems…

  3. I’m not a fan of the disgusting amounts of money many seem to make in banking – but I’m not sure I like this idea. For one thing undoubtedly the costs would in some way be passed back to customers, so the “they’re using our taxes” argument is a bit weak in so far as they already have our money, why let them take even more from us in some complex circle of money?

    More importantly I think there’s much more merit in encouraging corporate social responsibility, and good old philanthropy. If instead we force rich people and institutions to make donations via a ‘charitable tax’ surely that will lead to some resenting making further donations because they’ve already done their bit via a tax? I think this could be quite damaging in terms of the cultural impact it might have.

    Furthermore as a tax it presumably would be Government controlled and therefore only likely to benefit those charities with powerful connections.

    By all means put pressure (or incentives) for rich institutions and people to support charitable activities – but not as a tax.

  4. @mas – A few quick thoughts:

    1) The customers here are primarily large investors. And the costs are 0.01 – 0.05%!*

    I’m not sure any ‘it will be passed back to us, the poor customer’ arguments can fly here.

    Where any costs (of the 0.01 – 0.05% tax) are passed to end-users, then those end users hit (which seems hardly a fair word for such a low tax rate) by the changes will be those with greater involvement in the money markets. I.e. this is progressive tax.

    2) If you think you can encourage £2,600,000,000 worth of Corporate Social Responsibility from financial firms a year, then good luck.

    3) This is not a charitable tax. There is a proposal that it’s hypothecated to poverty reduction and development – but through governmental administration, not by handing all the funds to charities.

    This is about funding global commitments to climate change action; the millennium development goal commitments governments have already signed up to; and domestic poverty reduction programmes.

    That’s not charity. That’s straightforward sorting out of many big global issues.

    4) I struggle to understand your closing point. Why object to a micro-taxation on speculative currency transfers? If you have a general objection to all taxation it can make sense – but to defend the right of the rich to tax-free transactions and to suggest we should rely on the ‘charity’ of institutions that have shown little evidence of ethical behaviour seems odd indeed…

    (*In part – it really is that simple. In part, there is a bit more complexity – in that a Tobin tax should also slow the velocity of speculation on very small (i.e. < 0.05% profit) transactions in the currency markets, and that does depress the profits on those transaction. However, many of those transactions harm stability (note that the possibility of such transactions is very much tied to recent technological development in financial information systems) and in the medium to long term (or even the short term) investors should be able to switch strategies to longer term investments. That has a positive impact in tipping the balance back towards investment for real growth - rather than speculative investment betting against micro-fluctuations in the market - and based on who has the better computer model, not who is making the best decisions about meaningful use of global finance.)

  5. well maybe I’m overly sceptical but on the one hand saying it’s such a small tax level as not to matter, and then saying but look at the huge amount that would be raised through such a small tax – still equals that someone, somewhere will feel they are ‘losing’ that large amount of money, and simple business would be to find a way of getting it back. I find it very hard to believe that would not happen.

    The real point I meant to make is that I always think there’s more value to supporting people (and institutions which are just groups of people) to do things for good voluntarily.

    If instead you impose that, I fear those who are most able, will also become less willing, and culturally that will damage the very basis that charity in this country has been based on.

    re. your other points:

    2. If the argument for how insignificant that tax will be to those institutions stands up then why can’t they be convinced to do so voluntarily? (and lets be realistic in all likelihood the best outcome of this campaign will be a compromise that they do so albeit at a lesser rate anyway)

    3. OK so I’m cynical but mostly I’m seeing that money already being wasted in more and more bureaucracy. Perhaps I’m mistaken, but the impression I got is of charities putting pressure on to the big bad banks. Transferring that money from banks to NGO’s is no bad thing, but I can never get over that the cost of a landcruiser, decorating it in stickers, large house, private schooling for employees children etc. etc. is not the most effective way of using funds. Maybe where the banks could be really useful would be in developing effective systems for getting money cheaply and efficiently to and from small communities in developing nations (a little like the cola life concept – use the infrastructures that banks have towards social good).

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