When I first read about the financial transaction tax, it was a campaign adrift. A proposal had lost in the European parliament by just six votes – the UK being the leading voice against it. That was 2005, and the decade long campaign for the tax appeared to fizzle out.
A few years and a financial crisis later, and the tax is back on the agenda again. And so it should be. First proposed in the 1970s as a way of slowing down overheated capital markets, it’s a good idea just waiting to happen. With the vast sums moving around the money markets, a tiny levy of just 0.05% would raise billions of dollars. This international fund could then be used for development, climate change adaptation, or any number of useful things at very little cost to the financial sector.
The latest incarnation of the idea is of course the Robin Hood Tax campaign. It’s come long way in a short time, enlisting just short of 95,000 supporters and a number of high profile backers, including Bill Gates and Desmond Tutu. Once again, the European Parliament is largely supportive. At the upcoming G20 summit in Cannes, Nicholas Sarkozy will be recommending the tax.
And guess who will be standing in the way again? Yep, that would be Britain. The City objects to a financial transaction tax. Therefore, the British government objects to a financial transaction tax. Chancellor George Osborne intends to stifle any possibility of a Robin Hood Tax – not because he opposes it in principle, he says, but because unless it’s a global tax, it will make the EU (or more importantly London) less competitive.
It won’t and its a feeble excuse. Britain already has a unilateral transaction tax on shares: Stamp Duty. That’s charged at 0.5% and it hasn’t exactly held the London Stock Exchange back. Applying a much smaller tax of 0.05% is unlikely to bring the money markets to a grinding halt.
To put it bluntly, the biggest obstacle to the Robin Hood Tax is vested interests. The Conservative party receives over half its funding from the City, and the economy is hugely unbalanced in favour of banking and finance. Their lobbying power is immense.
So the campaign is currently encouraging letters to David Cameron to tell him to back the tax at the G20. Send yours here,