by billhoult on 29 June, 2013
Somebody asked me recently to think about whether I would support a “Robin Hood Tax”. As a Nottingham boy I was intrigued. I was always conscious that there are many that say “Robin Hood robbed the rich to give to the poor” but some say that “he robbed the rich because the poor had no money!”
Anyway the Tax is what is properly called a “Financial Transaction Tax(FTT)” and the proposal is that every time a financial transaction is made a small tax (typically 0.5%) of the cost be paid. The theory seems to be that the majority of transactions are made by financial speculators “playing the market” in exchange rates etc., without any concern except to make money on the deal.
Sounds like a good idea and in surveys not only do a majority of ordinary people support the idea but also many economists and politicians. However informed opinion (and I support it after looking into it) say that like “World Government” FTT is a good idea if only we could get international agreement on the issue (and that is not a trite statement).
International finance is infinitely diverse and flexible and if one Country introduces such a tax then speculators/dealers will just divert to somewhere else. From what I understand this was Sweden’s experience when they introduced such a tax and subsequently had to repeal it due to actually losing revenue (which I suspect is why it is one of the Countries that is strongly opposed to the tax being introduced in the Eurozone).
We also see this with other taxation issues with firms like Starbucks and Google etc., who devise complicated structures to only pay tax at the lowest level in tax havens; it is requiring long overdue international action to deal with this.
This is why I have come to the conclusion that yes FTT is fine but only if international agreement can be reached, particularly bearing in mind that the UK is a major world financial centre and would have a lot to lose in income and jobs if the Swedish experience was repeated here.
So it is a good idea and we would all like to punish the bankers and financial speculators who have got us into the mess we are in but there is an argument about cutting off your nose to spite your face so I am happy to leave it to national Governments to sort out-What say you?