Saturday, 11 September 2010

International backing grows for 'Robin Hood tax' on banks

EU ministers edge closer to financial transaction levy amid signs that International Monetary Fund is softening opposition to 'Robin Hood tax'

European Union finance ministers will step up talks on raising extra money from banks this week amid signs that the International Monetary Fund is softening its opposition to a "Robin Hood tax" on financial transactions.
Treasury sources said the chancellor, George Osborne, was prepared to back a financial activities tax on bank profits and pay at the Brussels meeting provided it was universally introduced, but was wary of a broader Robin Hood tax. Campaigners said last night, however, that a leaked IMF report showed growing international backing for a broader tax and urged Osborne to look at the revenue-raising potential of a levy of transactions.
David Hillman, a Robin Hood Campaign spokesman, said: "The rug has been pulled from under critics who claim that a Robin Hood tax would damage the wider economy or is unworkable. The IMF, EC and Leading Group of 60 nations have all said it is feasible. The main losers would be those who make lots of money from socially useless trades but the winners would be millions of people at home and abroad pushed into poverty by the economic crisis or whose public services are under threat."
An IMF paper, Taxing Financial Transactions: Issues and Evidence, said securities transactions taxes (STT) existed in many countries with little evidence that they distorted markets. It argued that a small levy on transactions might help to dampen the "herding behaviour" encouraged by computer-program trading. "Unilateral STTs, even if levied on fairly narrow bases, are certainly feasible as witnessed by their use in numerous developed countries. The fact that major financial centers such as the UK, Switzerland, Hong Kong, Singapore, and South Africa levy forms of STTs indicates that such taxes do not automatically drive out financial activity to an unacceptable extent," it said.
The paper added: "The impact on financial markets from a low-rate (less than 5 basis points), broad-based STT would likely be fairly modest, beyond its reduction of very short-term trading."
In its letter to Osborne, the Robin Hood campaign said a financial activities tax could, if combined with other measures, raise as much as £20bn a year in the UK. "We hope that the Ecofin meeting will provide a platform for taking this forward at the European level. Ultimately, we believe that a financial transaction tax has the greatest potential to raise revenue from the financial sector, as it offers a robust, simple to implement and fair mechanism."


don Franks said...

As a low paid anti capitalist worker who doesn't have a heavy handle on economic matters I ask, what is the point of this featured post?

Are we to believe that the IMF has had a turn of heart and is about to show social responsibility?

Is a sea change of boardroom driven tax reform going to eventually save the world's workers from penury?

Seriously - what are Socialist Worker's political conclusions from this material that you have chosen to feature?

David said...

Hi Don

I hope to reply to the political questions you raise in the next day or so. As for why the post has been featured on UNITYblog, there are two reasons.

One is because it contains some significant news about the international campaign for a Robin Hood Tax / financial transaction tax, which is of course one of the two demands of the Alliance and Socialist Worker backed Tax Justice Campaign. My interest in posting it therefore was the subject, rather than what it had to say about the subject.

The reason it’s been prominently featured at the top of UNITYblog for the past few days (longer than most posts recently) is accidental. I’ve been out of town for a few days, taking a break from the after shocks, and this post was the last of several I set up before I left.

David said...

So here's a response to the political questions raised by Don Franks in comments above.

1. The point of the post, why it was posted is outlined in my previous comment.

2. No, I don’t believe the IMF has embraced social responsibility. Do you think the article implies that?

Division among elites is often an important part of successful grassroots campaigns. The fact that most capitalists in this country eventually decided that it was best to give even the poorest men (and then women) the vote, didn’t mean that this wasn’t a demand worth fighting for. And the fact that some politicians and bankers in Europe think that a limited form financial transactions tax might help stabilise the financial system and / or raise funds for cash-strapped governments doesn’t change the fact that it’s a demand for progressive taxation.

3. No, an FTT, however it’s arrived at is not going to “save the world's workers from penury” (had to look that last word up, it means extreme poverty). But no one reform will do that. That includes various reforms that I know Don and I are both happy to campaign for, such as raising the minimum wage or restoring the right of workers in this country to strike.

However, a successful campaign to remove GST off food and impose a tax on financial speculation would shift the tax burden, a little, so it was less on the poor and more on to the rich.

And it would also, I think give the thousands of people who are supporting this campaign, (and the thousands more who will be needed if it is to be successful) some confidence that, through collective they can change things for the better.

I can’t speak for anyone else in SW on this matter, but my political conclusion is that the divisions among the global elite on this issue will encourage supporters of our campaign.

Don Franks said...

David, I'm all for divisions among the ruling class that weaken capitalism, but the thrust of the original post you chose to run is not about that. In fact, its the opposite. The argument presented in the original post is for a sort of "feasible" capitalism, that would not "damage the wider economy". When you look up the Robin Hood page there is this crazy- Oh look just one little sensible adjustment could fix up so much - sort of stuff.
That can only hold up the struggle for socialism by laying illusions in the way of reality.
Tax reform has always been about nuttiness and cranks and alternatives to class struggle. Sir Thomas Skinner used to end every FoL conference with an encruciating half hour lecture on bad banks and tax reform. All that did was waste our drinking time.
The working class has no potential power making pleas for fair tax. We have power at the point of production and in the streets. The revolution will not be "economically feasible" and it will damage the "wider economy" beyond repair.